Towson University: Why Are Grocery Store Shelves Still Empty? A TU Supply Chain Expert Weighs In.

Towson MD

11 February, 2022

2:38 PM

Description

Press release from Towson University: Rebecca Kirkman February 11, 2022 Chaodong Han explains the causes of the current supply chain crisis, when to expect a return to normalcy Nearly two years since the COVID-19 pandemic began, online orders that used to show up in days are now taking weeks, and grocery store shoppers continue to find empty shelves. Meanwhile, inflation is at its highest in 40 years. We asked Chaodong Han, professor and chair of the Department of Business Analytics & Technology Management that houses the supply chain management graduate program, to break down the current supply chain crisis. A specialist in U.S. manufacturing, transportation, trade and supply chain technologies, Han has presented his research to the Baltimore business communities, international academic conferences and supply chain management professionals. Simply put, supply chain is to match demand with supply. A successful supply chain is to deliver the right products, in the right quantity, at the right place, at the right time and with the right price. Normally, manufacturers procure raw materials from their upstream suppliers, produce finished products, move products to distribution centers and retailers and, finally, to customers through last-mile deliveries. Currently, the supply chain has been disrupted by the COVID-19 pandemic. Suppliers are not able to produce enough products due to plant closures. The logistics industry is not able to move inventory freely and timely around the globe primarily due to port jams, shortage of truckers and lack of warehouse workers. Essentially, the current supply chain crisis results from the stark imbalance between stimulated demand and constrained supply. Basically, the COVID-19 pandemic has exposed the long-standing vulnerabilities of the U.S. supply chain while demand has been further boosted by expansionary monetary policy and government relief and stimulus packages. In the short term, the supply chain crisis may be mitigated if the U.S. government can swiftly bring supply and demand in balance through cooling down demand and beefing up supply, including tightening monetary policy, containing inflation, easing stringent COVID-19 restrictions and incentivizing the supply of labor and cheap fuels. It may take six months or a year before the supply chain resumes to the pre-pandemic state. In the long term, the U.S. needs to modernize its aging infrastructure, encourage the stable supply of labor and cheap fuels and develop a resilient national supply chain strategy. U.S. companies need to transform their global supply chains through bringing manufacturing back to the U.S., onshoring/nearshoring and diversifying supply bases and transportation networks. Services have been limited or even eliminated during the pandemic. But demand for physical goods has surged due to the booming of e-commerce. Unfortunately, the supply chain crisis and inflation appear to occur in a vicious cycle. On the one hand, prices surely go up when limited supply is not able to match surging demand during the supply chain crisis. On the other hand, inflation leads to higher fuel prices and labor costs, making supply chain more expensive and frequent transportation unsustainable. Eventually supply chain costs will have to be passed on to consumers.   This press release was produced by Towson University. The views expressed here are the author's own.