current issues in supply chain

1. Supply chain current issues
Mona Ali Ali
Dr.-Ing, MBA

2. What do you
think the
current topic
is?

3. Inflation!!!!!
• Inflation is usually caused when too much money is put into
circulation by a central bank to pay for government debt or just to
stimulate economic activity.
• Specific disruptions cascading throughout the economy, leading to
general shortages and price increases.
• Massive government spending in many countries, including the U.S.,
provided continued spending power for many of those put out of
work; this kept overall demand for goods and services up, even as
their production was slowed by the lockdown.

4. Inflation
• If the cost of borrowing money rises, consumers and
businesses have less money to spend. As demand
falls economic growth slows down and in theory so
should the prices of goods and services.
• Increasing the Bank rate is like a lever for slowing
down inflation

5. Supply chain disrupted
• The red-hot economy of 2019 was a finely tuned machine.
Manufacturers, farmers, restaurants and retailers relied on what they
needed to be delivered “just in time.” They got just what they
needed, just when they needed it; this kept down their inventory
costs and made the economic machine as efficient as possible.
• The lockdown economy of 2020 began with consumers panic-buying
milk, toilet paper and other staples. The demand shifts discussed
above created imbalances in the economy, leaving businesses with
the wrong mix of inventory to meet the new demands. The fine-tuned
machine was tilting.

6. Shipping!
• There weren’t enough container ships or container port capacity to
move everything we wanted from Asia. As of this writing, 77
container ships were waiting at anchor for a berth to unload at the
ports of Los Angeles and Long Beach; this number is
normally zero. Rail freightwas short and getting more expensive

7. Chips
• There weren’t enough
computer chip factories to
supply the electronic brains
of everything from computers
to cars.

8. Effect
• The same logistics experts that
had pushed “just-in-time”
inventory management began
telling the world’s producers
instead that they should stock up
“just-in-case”; that they should be
more resilient.
• Some of these businesses are
profiting from high prices for their
short supply.

9. Effect
• For want of a computer chip, the auto
wasn’t assembled. For want of
lumber, the home wasn’t built. For
want of a shipping container, the
television didn’t arrive. For want of
natural gas, the fertilizer wasn’t
produced; for want of fertilizer, the
crop was stunted. And all for the
want of a few key elements of the
supply chain, the price of almost
everything rose.

10. Effect
Generally, higher interest rates increase
the value of a country's currency. Higher
interest rates tend to attract foreign
investment, increasing the demand for and
value of the home country's currency.
Making it difficult for importers and
interesting for exporters.

11. Russia Ukranian war
In 2021, rail operators ran more than 1,200 freight trains per month
between China and Europe, transporting almost 1.5 million containers.
Many of these trade routes from China transit through Russia, Ukraine
and Belarus on their way to Western European destinations.
In addition to gas and oil, Russia’s top exports include coal, iron,
platinum, raw aluminum, sawn wood and copper. So many global
commodities markets will be squeezed, and we can foresee some
shortages of raw materials (sanctions).

12. War Cont’d
As both countries are major exporters of agricultural
products, we can also expect global food supply chains to
be impacted.
Russia exports over $6 billion of wheat annually and is a
major producer of vast amounts of the essential raw
ingredients for the fertilizer products that are used in
produce grown around the world.

13. What to do?
• As a result of COVID, many companies were
already re-evaluating their supply chains,
exploring options for near-shoring and/or
reshoring of their sourcing and production closer
to home.
• However, reconfiguring and relocating your global
supply chain is much easier said than done.
• Today’s global supply chain ecosystems have been
built and fine-tuned over many years. They
cannot easily be untangled, unpacked and moved
elsewhere. Whether near-shoring or re-shoring,
this is a major undertaking. And, of course, you
can’t stop your business whilst you’re
reconfiguring your supply chain.

14. Parallel plan
• But this Ukraine crisis on top of two years of COVID
disruptions has surely brought many companies to a tipping
point that will result in real action during the coming years
on near-shoring and reshoring initiatives. Supply chain 2025
will undoubtedly look significantly different for many
companies.
•

15. Parallel plan
• Supply chain resilience has become the key strategic priority
for this decade. Multiple initiatives need to be undertaken,
including revisiting the supply base to identify sources closer-
to-home and adopting wider deployment of dual- or multi-
sourcing strategies, featuring multiple suppliers in multiple
locations.

16. Parallel plan
• some large-scale near-shoring activity with many companies
adopting a more regional approach — e.g., producing in Latin
America for the USA, and serving developed EU markets with
products made in lower-cost European nations such as Poland,
Hungary or Turkey, potentially also in some north African
countries.

17. Parallel plan
• The technological advancements and
reducing costs in robotics and automation
will also enable some businesses to re-
shore their production activities back into
high labor cost markets, further
empowered by increasing availability of
Robotics as a Service (RaaS) solutions,