By: Keith Schneringer | July 23, 2021
Part one of a series analyzing the continued impact of COVID-19 on the facility supplies and foodservice disposables industries
The COVID-19 pandemic has dominated the news and collective psyche of the world throughout 2020, and its spread and the resulting cascade of ramifications have led to a global crisis of unprecedented reach and proportion.1 As was written in one of our articles on this topic last year,2 it would be the height of understatement to say that the COVID-19 pandemic has had a dramatic and oversized impact on many of the facets of our everyday lives which we may have previously taken for granted.
From state and community lockdowns, to the closures of “non-essential businesses” and public gathering places like schools, churches, and sports venues, to the implementation of social distancing measures3 and ongoing efforts to vaccinate large segments of the population,4 to the sheer numbers of cases and deaths attributed to the virus,5 it has been anything but “business as usual” for the world for well over a year now.
And one of the “business as usual” areas of our everyday lives which we may have previously taken for granted prior to the pandemic, and which has been hit particularly hard over the course of the last year and a half as a result of COVID-19, is the global supply chain6 and our collective ability to be able to source and purchase the products which we have come to view as basic staples of our everyday lives.
Throughout 2020, shortages of Personal Protective Equipment (PPE)7 like gloves and face masks, as well as hand sanitizers, disinfectants/disinfectant wipes, and toilet paper8 were all fairly well documented, and could most easily be explained in a very straightforward way: there was a rapid and unanticipated massive global surge in demand for these specific products which could not be met with the available global supply.
After months and months of shortages on these products throughout most of 2020 and into the beginning of 2021, it is worth noting that as this article is being written in the summer of 2021, if you would like to purchase some PPE,9 or hand sanitizers,10 or disinfectant wipes,11 chances are pretty good you will be able to find everything you may need now.
So… now that the supply chain has been able to accommodate for this dramatic spike in pandemic-related demand for these specific products, and the lockdowns are lifting, and people are being vaccinated, and COVID-19 cases are decreasing, and the world is re-opening, everything is ready to go back to “normal”, and we can get back to purchasing all of the rest of our “regular” supplies, right?
Unfortunately for all of us, the short answer to that question is “not so fast”!
Now that we seem to be able to source plenty of PPE and hand sanitizer, it seems like we are unable to source much of anything else which doesn’t also now come attached with a much longer lead time than usual, as well as an increase in price. Everything from computer chips to chlorine to chicken – seems to be caught up in these shortages which are popping up all across the supply chain.12
This year, the supply shortages we are seeing across all of these multiple product categories and multiple industries can’t necessarily be attributed to any one particular reason like they could in 2020. And although the COVID-19 pandemic can be seen as a culminating factor leading to these ongoing shortages in the global supply chain, the reality is that just like an iceberg was the culminating factor in the sinking of the Titanic, it wasn’t the only contributing factor in the “event cascade” chain of circumstances which eventually led to the luxury ocean liner’s doom.13
The COVID-19 pandemic can therefore be seen as the proverbial “straw” which has broken the proverbial “camel’s back” of the global supply chain, but there are several other contributing factors in this particular event cascade which is now culminating in the supply shortages we are all currently experiencing.14
And there have been no shortage of potential candidates for supply chain disrupters which can be nominated for blame in this supply chain shortage event cascade, such as the logistical nightmare of the Suez Canal blockage,15 the freight backlog and plastic resin production stoppage of the Winter Storms in the Gulf Coast,16 and the computer hacking that shut down the flow of fuel through the Colonial Pipeline.17
As a matter of fact, the supply shortages of 2021 have been described as “a perfect storm of ugliness”18 by Nick Vyas, Executive Director and Co-Founder of the University of Southern California Marshall’s Center for Global Supply Chain Management.
“Anything that can go wrong is going wrong,” Vyas says.18
According to a recent survey from the Institute for Supply Management (ISM),20 companies and their suppliers “continue to struggle to meet increasing levels of demand,” noting that “record-long lead times, wide-scale shortages of critical base materials, rising commodities prices, and difficulties in transporting products are continuing to affect all segments” of manufacturing.19
The ISM survey also found that although factory activity increased to a reading of 61.2 in May 2021 (which is an increase from 60.7 in April 2021, and above a reading of 50 which indicates an expansion in manufacturing), inventories at factories are barely growing, and business warehouses are almost empty. 19 Further, an “overwhelming majority” of companies are hiring or attempting to hire, “with more than 50% of them expressing difficulty in doing so”, as a measure of factory employment fell to a six-month low.20
Suppliers are also taking much longer to deliver raw materials to manufacturers, with the supplier deliveries index jumping up to 78.8 in May 2021, according to the ISM survey. This index is the highest reading since April 1974, and it follows a reading of 75 in April 2021. For context, a reading on this index which is above 50 suggests slower deliveries to factories.20
Shortages like these are disruptive and annoying, and they are not something that consumers in developed economies are used to dealing with. And unfortunately, according to Neil Shearing, Group Chief Economist at Capital Economics, “Supply shortages are not going to disappear overnight – on the contrary, they are likely to persist in some form until well into 2022.”21
Keith Schneringer is WAXIE’s Director of Merchandising + Sustainability. He is a LEED AP O+M and CIMS-GB ISSA Certification Expert who has been a consultant on a variety of LEED and CIMS-GB projects, and has presented to audiences at USGBC, BOMA, IFMA and CHESC events (among others). He enjoys learning and sharing information on topics related to sustainability and green cleaning and can be found on Twitter @kschneringer.
Sources: