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What is Causing the Supply Chain Issues?

September 19, 2022

Supply chain disruptions affect the availability and pricing of products. This also financially affects producers, processors and distributors. For example, if a product is unavailable and there’s high demand for it, businesses lose out on the revenue. 

What is causing the supply chain issues? 

It’s a global problem which has been made worse by geopolitics, international conflict, local China lockdowns, shortage of truck drivers and other personnel, production delays and overreliance on global trade and third parties. 

A single slight issue can have a major cascading and downstream effect. For example, COVID-19 lockdowns can instantly reduce manufacturing and limit cargo transport. The volume of goods produced will be lower and these goods will arrive late on their destinations. 

Rising fuel costs (and the pricing’s unstable and unpredictable movement) also play a huge role in the entire supply chain. A high fuel price puts a huge burden to the transport industry. Because of the thin or even negative margins, some of the transport companies might stop their operations for a while. And even if they continue operating, downstream customers might not be able to shoulder the higher transport costs. These downstream customers might then stop ordering for a while or start reducing their order quantities. 

How to solve our supply chain problems 

It’s a huge challenge given the global and interdependent nature of the problem. To minimise the sudden and ongoing impact, business owners and managers have applied the following measures: 

  • Make operations more flexible, resilient, adaptive and responsive (e.g. adjusting in real time depending on current trade flows) 
  • Adapt to digital operations and make data a source of opportunity 
  • Reduce reliance to key trade partners and diversifying partnerships and collaboration 
  • Apply an ongoing risk monitoring methodology because of the rapidly changing economics and supply chain industry 

In other words, real-time insights and actions can help mitigate supply chain risks. This can help transport companies deliver the necessary goods on time and on budget. This also helps companies better plan their finances and operations.