Supply Chain Crisis in 2022

Girişimci, Fikir, Yeterlilik, Vizyon, Amaç, PazarlamaIn general, the formation of the concept of the Supply Chain is relatively new. However, the term logistics has an older history; Supply Chain entered business life after the 1990s and has come today as a separate management branch. When it comes to today, the 2020s, the Supply Chain has proven itself and stands before us as a business unit that companies cannot give up.

Euler Hermes has published its Global Trade Report. It closely examines many factors affecting trade, such as logistics bottlenecks, dependence on China imports, the condition of ports, and the effects of Covid–19. According to the report, global Supply Chain disruptions are expected to remain high until the second half of 2022 due to the impact of the pandemic, China’s ongoing policy to reset Covid–19, and the volatility of the Chinese New Year’s demand and logistics.

The report emphasizes that global goods trade, which has been performing strongly since the second half of 2020, contracted in the third quarter of this year, 75% of this contraction was due to production deficits, and the rest was due to logistics bottlenecks.

In contrast, global trade volume, which increased by 8.3% in 2021, is expected to gradually return to its pre–crisis long-term average and increase by 5.4% and 4% in 2022 and 2023, respectively.

Supply Chain Models are specific and stable. For each business model, you need to play around with the main elements of the supply chain. Financiers became very involved when Supply Chain Management became an effective company tool. Cost factors are essential at all times and in every job, and savings are always necessary. Unfortunately, however, financiers got a little too engaged in the Supply Chain business.

In the last 15–20 years, the issue of saving more than the efficiency of the Supply Chain has come to the fore, and this plan has hit the wall with the pandemic.

The point where we can continue from here is straightforward; If we could continue applying these models on the central axis of efficiency, we are experiencing many Supply Chain problems today because the pandemic would not have occurred. The simplest example we can discuss is the Just–in–time system.

But now, this system is complicated because supplier companies have to deal with the illness of workers due to Covid–19, isolation measures, etc. They often have to stop production for reasons. This situation hits most companies that produce according to the JIT system.

Diagrams, Graphs, Charts, Trading, AnalyzingThe supply–demand imbalance, rising transportation costs, and the shortage of containers pushed up all commodity prices, especially energy. This development, which also brought global inflation to its peak, is causing significant damage, especially in Europe.

While maritime transportation costs have increased ten times, the links in the Supply Chain on land, in the air, at the ports, and the warehouses are entirely broken. Moreover, there is a consensus that this process created by the pandemic will continue for a while. Global delivery times in manufacturing are experiencing their worst decline in 23 years, according to a study by JPMorgan Chase and IHS Markit. The Global PMI Supplier Time Index, created with data collected from the managers of approximately 13,500 businesses in more than 40 countries, dropped to 35 levels.

A value of fewer than 50 means that the timing is broken. The study shows that the current Supply Chain disruption is worse than last year when many factories closed due to Covid–19 restrictions. Furthermore, the study reveals that the deterioration in the Supply Chain directly affects inflation.

3 FACTORS THAT WILL RETURN TRADE TO NORMAL

Supply Chain disruptions caused by the mismatches in global supply–demand and shipping capacity triggered by the Covid–19 outbreak are expected to decline in the next period after peaking. The three factors that will be effective in the return of trade to average starting from the second half of 2022 are listed as follows:

  • Input shortages eased due to increased capital expenditures, especially in the USA, and stocks in most sectors returning to pre–crisis levels or exceeding those levels.
  • Consumer spending on durable goods is slowing down as renewal times are long and sustainable consumption behaviors are adopted.
  • We are reducing transport congestion with increased capacity.

Problems in the Supply Chain, from rising raw material prices to the lack of components such as chips, from densities at ports to shortage of truck drivers, threaten the global economy.

The Supply Chain, which was interrupted last year due to the Covid–19 outbreak and the quarantine measures implemented, is struggling to recover while facing rapidly increasing demand with the increase in vaccination and the relaxation of standards.

This situation causes global chaos for manufacturers and distributors, who cannot supply and produce as before the epidemic. In addition, confusion in the supply chain is limiting the ability of manufacturers to meet growing demand.

The global Supply Chain covers the process from the production stage of the product to the consumer and expresses the operation network in this process. Links in the chain include manufacturing components, the supply of labor, and the logistics of goods.

While the global supply chain is struggling for many reasons, experts state that the biggest problem is the ongoing Kovid-19 outbreak.

The pandemic disrupted the supply of certain goods last year, causing factory closures, layoffs of workers, and disruption to production worldwide.

With the relaxation of epidemic restrictions, consumers, whose savings increase during their stay at home, desire to improve their living conditions and demands for products. At the same time, manufacturers and companies have difficulty keeping up with the rapid recovery in the market.

The incompatibility of measures to combat the epidemic by countries worldwide also complicates things. While epidemic restrictions are loosened more in the USA, strict criteria continue in Asia.

kitaplı kahverengi ahşap rafSupply bottlenecks are already signaling to hinder economic recovery in some countries, while experts warn that Supply Chain woes will “get worse before they get better.” Supply Chain problems are expected to limit production globally until next year.

Experts point out a history of worsening problems in the Covid–19 outbreak.

The most crucial problem is the economy’s growth to prioritize the production of cheap goods instead of Supply Chain flexibility and the creation of a single country–dependent Supply Chain.

Experts say that these problems will not be solved quickly and that extending the working hours of employees in the logistics industry is a small step that targets only a part of the Supply Chain.

Stating that infrastructure investments will help the problems in the Supply Chain, experts emphasize the importance of facilitating access to the global vaccine.

Experts warn that people should be prepared for higher prices and longer waiting times for a product to be supplied.