The onset of the COVID-19 pandemic has created a massive disruption in the global supply chain. Avenues of trade that were once taken for granted have now been reduced or completely eliminated, creating disruptive bottlenecks for countries around the globe.
When looking at bottlenecks in the supply chain, it is important to understand their causes – this is the surest way to find viable solutions and for companies to reestablish a healthy global supply chain.
Before we jump in, let’s take a look at the bottleneck definition used in global trade and how the COVID crisis has affected it.
A bottleneck is a constraint in a supply chain that occurs when the demand of a supply chain outweighs the capacity of a system to process it. A supply chain bottleneck creates problems for a manufacturing company, for example, as the materials it needs to produce its products become harder to obtain.
An electronics company, on the other hand, will typically only keep a week or two’s supply of manufacturing materials in inventory, due to the high cost of financing those goods. This means bottlenecks will cause the company to run out of resources, reducing its operating capacity and productivity.
During normal operations, identifying and eliminating bottlenecks is a long-term project that is necessary for the efficient operation of a company – but these bottlenecks have only become bigger in the face of a global pandemic.
Supply Chain Bottlenecks During COVID-19
The rapid crippling of the economy that occurred with the onset pandemic requires a much faster timetable for identifying and resolving supply chain bottleneck problems. The size and scope of these problems has also led to a rapid increase in bottleneck shifting, in which the elimination of one bottleneck does little more than reveal the next barrier in the supply chain.
Some of the most significant bottlenecks that have emerged during the COVID-19 pandemic are:
- Travel restrictions necessitating alternative transport.
- Closed or restricted borders.
- Imbalanced container fleets.
- Lack of cargo space in ports.
To better understand the reality of supply chain bottlenecks, it is imperative to look at how each of these issues have stalled the movement of goods and what companies can do to overcome them.
Bottleneck in Supply Chain: Transport Restrictions
One of the first industries to feel the impact of the coronavirus crisis was the airline industry. Flights were restricted in February and public confidence in air travel soon plummeted. The reduction in commercial flights created the first COVID-19 supply chain bottleneck, as companies that were accustomed to shipping on passenger flights now needed alternative forms of transportation to carry their goods.
The alternative to shipping cargo on passenger planes is to utilize carrier transports. However, even as the carrier industry has increased flights, it has not met the demand. In addition, the price of utilizing these flights to transport goods has skyrocketed.
Supply Chain Bottleneck: Border Closures and Restrictions
While restrictions on air travel were the first enacted and remain some of the most stringent, shipping products by land have been affected as well. Borders between nations were closed or restricted around the globe, and this bottleneck in supply chain hindered the movement of goods across boundaries that once presented no obstacle.
While you need to wait for restrictions to loosen in order for a closed border to open, a restricted border is still presents a variety of challenges.
New procedures for customs approvals are developed by officials in the hopes of slowing the spread of COVID-19. This causes unforeseen delays when sending manufacturing materials by truck to their destinations. These delays don’t just cost a company time, either. Costs begin to increase at a steady rate alongside lost time.
Bottleneck in Supply Chain: Imbalanced Container Fleets
Despite the many restrictions placed on ground and air travel, cargo trade by ocean vessels remain dependable and open. However, the bottlenecks in supply chains have caused problems for efficient sea commerce.
The distribution and throughput of cargo flow from country to country has become imbalanced. The global overdependence of cargo from a single source, such as manufacturing giants like China, has begun to far outweigh what other nations can try to export.
The inequity between trading partners makes sending fleets too costly for the companies that run the vessels and shipping organizations. This creates another bottleneck for manufacturers who are already dealing with disruptions to their supply chain.
Supply Chain Bottleneck: Lack of Storage for Containers at Port
Even when cargo ships successfully reach port, bottleneck supply chain problems can still be present. The Pacific Northwest Seaport Alliance, which represents ports in Seattle and Tacoma in Washington State, has reported a lack of cargo storage space, which has disrupted and bottlenecked the flow of goods that are in containers on these ships.
The Pacific Northwest was the first area of the United States affected by the coronavirus pandemic, and as such was one of the first to restrict its economy to stem the spread of the virus. Without the proper workforce to unload, move and store the cargo that arrives at port, another bottleneck emerges as goods are unable to reach locations and consumers.
How Can COVID-19 Bottleneck Supply Chain Problems Be Overcome?
Considering the rapid pace at which supply chain disruptions are emerging, businesses need to be proactive. Companies should perform a full assessment of their supply chains in order to isolate potential weaknesses. Once those weaknesses are identified, companies should utilize technology to plan for future obstacles.
One important way that companies can prepare for bottlenecks in supply chains is by investing in simulation modeling. Supply chain simulation modeling gives your company the opportunity to develop contingency plans for all of the challenging scenarios facing modern supply chains.
By looking at all of the threats to your supply chain and playing out how they can affect your day-to-day operations, you can keep your company agile and ready to adapt to new hurdles.
Use Simulation Modeling to Overcome Supply Chain Bottlenecks
The Coronavirus presents unprecedented challenges, and there are no easy solutions. However, you can alleviate your company of these challenges by investing in accurate simulation modeling. Visit Mosimtec to see how your company can avoid supply chain bottlenecks and prepare for the future.
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