Intelligent CIO Africa Issue 70 - Page 31

TALKING

‘‘ business

The supply chain crisis around the world is significant , and it doesn ’ t feel like it ’ s going away . The impact of this on business is potentially enormous , and even more difficult in these times of high inflation , high interest rates and potentially reducing demand .

Shortages of semiconductors and chips is probably most visibly widespread issue , affecting no less than 169 industries , including IT , motor vehicles , consumer electronics , appliances and many , many more .
However , apart from the shortages of oil and gas , of wheat and sunflower oil , which are being felt since the invasion of Ukraine by Russia in February , there are many other shortages , too . For example , there ’ s a global shortage of epidural catheter kits – something of serious concern to expectant parents . I ’ ve read of year-long waiting lists for children ’ s bicycles , of clothing , and so much more , too .
And , of course , disruptions affect other industries , too – if an event cannot be staged because vital equipment is missing , that impacts the event companies , accommodation and food businesses , and all others peripherally involved , too .
So , what is causing these shortages and what scenarios are likely , as it ’ s vital for businesses to understand this to properly manage their risk exposure ? You simply cannot say that your business will not be impacted at all , as the ripple effects impact everyone .
So , many production lines were stopped , as were things like foundries , and staff were laid off . Ports were closed , too , so a number of ship operators decided to scrap ships rather than incur the costs of maintaining them while unable to operate them . So even for those factories able to operate , generally under some sort of emergency allowance , being able to ship the goods was subject to a whole new set of problems and delays .
As restrictions in countries were eased and economic activity started to pick up , companies found themselves in the unusual situation of not being able to get the items they were ordering – the global efficient “ just in time ” systems had become “ just wait for some time ” ones instead . Given that some 80 % of global international trade is carried by ship , a reduced number of vessels compounded by them being in the
Guy Whitcroft , Founder , Business Fitness
The start of the supply chain issue was , of course , the COVID-19 pandemic . Acting on what turned out to be incorrect information ( possibly because China was trying to cover the believed source ) on the speed and severity of infection , governments around the world imposed restrictions on gatherings and so , in effect , shuttered businesses , in a way never seen before .
So , what is causing these shortages and what scenarios are likely , as it ’ s vital for businesses to understand this to properly manage their risk exposure .
And while many service business could , and in most cases did , pivot to a work-from-home model , albeit with varying degrees of success , manufacturing business and others reliant on physical presence to operate , could not and so had to suspend operations . And , of course , it was not just factories that closed , but the logistics side of things was also affected – if not closed completely in some cases , then severely curtailed – while China closed entire cities for protracted periods in its unsuccessful drive to achieve zero-COVID , and continues to do so from time to time . wrong parts of the world awaiting slots to either load or unload cargo saw massive increases in shipping times and costs .
And these delays continue today , made worse by both China – the world ’ s major manufacturing hub – still closing port cities without notice and other ports around the world suffering ongoing shortages of staff due to both illness and being unable to replace lost workers .
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