What you’ll learn:
- Why supply and labor strains are still affecting industries worldwide
- How decision-makers can use this time to reevaluate their methods
Though the World Health Organization has declared COVID-19 is no longer a health emergency, it’s still creating significant problems for all sectors. People everywhere experienced such a major upheaval that affected all areas of life. Many could not work, but that time spent quarantining changed how several saw their work/life balance. Those revelations have created ongoing supply chain shortages and labor hindrances.
Manufacturers in all sectors have felt the hurt from this stagnation. What is causing these ongoing issues? How long will they persist? Most importantly, how can supply chain professionals mitigate these shortages to continue satisfying clients?
Supply Chain Shortages Still Run Rampant
Material shortages became extremely common because the world shut down and most people could not work. Businesses everywhere felt the hurt, and many struggled to make ends meet as they lost out on sales. In 2020, worldwide supply chain disruptions cost $4 trillion in Europe and the United States alone.
However, material shortages have yet to rebound as the world enters its new normal and workplaces reopens to full capacity. For example, the logging industry cut back on production because leaders thought demand would decrease during the pandemic. Instead, people started buying up homes faster than ever, and every player in the construction sector fought to keep up with the buyers. Those purchases still haven’t slowed and continue supply chain shortages, exemplified by the current housing crisis in the U.S.
Other industries aren’t faring any better. The current lead time for a padmount transformer is as high as 70 weeks — a significant problem if a structure experiences a failure. Experts also see no signs of this timeline shortening any time soon. Continuous buying spurred by fear leads to fewer available materials, increasing supply chain shortages instead of lessening them.
Changing Ideals Adjust the Labor Supply Chain
As many in the industry can attest, the labor supply chain has changed since the pandemic. People no longer want to work in highly physically demanding positions without proper compensation. While job opening rates are about 50% higher than before, the labor force is nearly 5 million people smaller.
Talks of the “great resignation” were common in 2020 and 2021. People were forced not to work, and many decided they wanted to exit their field entirely. Before COVID-19, many more laborers were willing to put up with their jobs. However, the virus caused many to reanalyze their priorities and if their current position supported those needs. A record-breaking 47.8 million people quit in 2021, with many leaving low-paying and high-taxing jobs in search of a better career.
Most of those workers do not regret their choice to leave. About 85% are happy with their new jobs and 81% are glad they resigned. That’s not good news for supply chains, as it means most of those who quit do not want to return. Leaders must make significant changes to their operations to interest new employees and retain their current ones. The labor supply chain has shifted its priorities and people must keep up to remain afloat.
Labor Shortages Impact Supply Chains
Of course, the lagging labor supply chain creates supply chain shortages. A lack of bodies in warehouses to move products — as well as fewer employees manufacturing items or components — affects the entire world. After all, how can a shipping company move products when there are none to ship? How can they send items off without people flying, driving or sailing them to their destinations?
The further back a player in the supply chain lacks workers, the more its slowness affects the end user. For instance, imagine a factory that makes ceramic bowls. Even if the business needs more people to ship its products, it could still sell locally and make a profit. Additionally, it might struggle if it has fewer workers to paint the bowls, but there would still be items to offer. However, if those who make the pottery decide to quit, everyone along the line feels the pain.
This concept extends to any sector that requires products from external sources — construction, technology, retail and more. Labor shortages impact supply chains because someone needs to make and ship the items or components. Without them, the whole production comes to a standstill.
What Can Professionals Do to Remedy These Pain Points?
All these stressors have supply chain and procurement professionals scrambling for solutions. Considering labor and supplies have yet to level out in a post-pandemic world, it’s natural to worry the current circumstances will last forever. However, taking this time to improve adaptability and employee conditions instead of relying on old techniques will help a supply chain operation future-proof itself and ease ongoing strains.
The Role of Technology
Modernizing the supply chain will take work, but all this new technology has a place in the sector. Robots — once so expensive they were unattainable — have dropped in price thanks to continued production and innovation. They can work alongside employees, streamlining their tasks and reducing physical issues. Heavy lifting, repetitive strain and improper carrying techniques cause common injuries in supply chain workers, but robots can help.
Additionally, the blockchain is making waves in the industry. The original manufacturer starts the chain, and everyone along the line enters a new block. This ease of communication helps parties track a shipment’s lead time, reduces shipping projections and enhances transparency. Investing in efficiency goes a long way when staffing is low, products are few and customers are rigid.
Appealing to New and Existing Workers
Employers must be creative to attract and retain team members. In 2021, most people who quit their jobs gave low pay, no advancement opportunities and disrespect as reasons for doing so. The first two may incur additional costs for leaders, but retaining their top talent is worth it. No one working a full-time job should struggle to live off what they earn — especially those in a field as demanding as supply chain operations.
It’s clear that company culture also matters to many employees. No one wants to work where they feel unnecessary, and higher-ups and co-workers perpetuate rudeness. Create an environment where workers can voice their problems without rebuke and offer bonding opportunities. These small changes could go a long way towards fostering retention and hiring.
A Better Industry Is on the Horizon
It may seem like there is no end to the labor and manufacturing shortages. However, use this time to reflect on what’s not working anymore and formulate manageable responses. Because labor shortages impact supply chains, starting there will likely encourage benefits throughout the sector.
