Crack That Whip: Woes in Supply Chain Persist

Crack That Whip: Woes in Supply Chain Persist
Loaded cargo trucks wait in queues at the Port of Los Angeles.

This is definitely a first-world problem, but I have recently been having a hard time finding my favorite brand of paper plates in stores in northwest Arkansas.

While it is disheartening to know I have aged into someone who has such a thing as a favorite paper plate, my challenge also provides a bit of insight into the turmoil roiling the supply chain world. Not to mention that my daughters somehow go through 32 paper plates a day, so I really need the world infrastructure to get straightened out.

Doug Voss, a supply chain management professor at the University of Central Arkansas in Conway, said the supply chain is certainly working out some kinks and doing that may take time. He called it the bullwhip effect, in which a seemingly minor blip in the supply-demand relationship at the bottom of the chain creates increasingly harsher reverberations as it travels up the chain.

“It started with COVID last year and continues into this year with the delta variant,” said Voss, who’s on the board of directors of the Arkansas Trucking Association. “It’s just a complete mess.”

FreightWaves reported that there are more than 40 container ships at anchor or just drifting outside the ports in Los Angeles and Long Beach, California. Pre-pandemic, there were usually none.

Goods are at a standstill in many places, Voss said, and those that are being unloaded are moving slower because of a tight labor market and, no surprise, a truck driver shortage.

Voss said ordering an item such as furniture will be a test of patience because of the backlog. Did I mention I just bought a new house and while waiting for all the furniture orders to arrive, I walk around stores looking for paper plates?

“You’ve got a shortage of truck drivers and a shortage of containers, or they are in the wrong places,” Voss said. “You can’t get anything anywhere. It is an eight-month lead time to get a piece of furniture. If you want a car, jeez Louise, good luck on that.”

That reminded me of something Jeff Williams said earlier this summer. Williams, the CEO of America’s Car-Mart, said his company was finding it difficult to find used cars because new car manufacturers stopped or limited production when the pandemic hit.

When they tried to restart production, carmakers found that microchip producers had moved their products to other customers. That made new cars harder to find and more expensive, a situation that led to increasing demand and prices for used cars.

“We were sitting here with a chip issue, increased demand, limited supply in a normal environment, but then you’ve got the pandemic demand and other issues that are affecting the supply and demand of used cars,” Williams said. “It has been very tight since last summer and it has gotten worse as the fall has gone on and the chip shortage is more severe.”

Therese Rohr, the co-owner of Food Loops (see At Food Loops, Waste ‘Smells Like Money’), said finding compostable items for their business is harder now because of supply chain congestion.

“They are right now being hit with incredible shipping increases,” Rohr said. “This year has almost been more challenging than a year ago when everything was locked down.”

Voss said we better strap in for a long wait because the supply chain is too complex to straighten out overnight.

“Our whole supply chain is just one big system,” Voss said. “All the nodes have to work together and work properly. It normally did before the pandemic, and you had a smooth flow of goods. It works beautifully. You start throwing all these wrenches into the gears — [but] at some point in the next couple years, assuming we don’t have any future shocks, it is all going to work out.

“The trend is going to continue the next few months, and I don’t see how we avoid it in the longer term, either. There are two ways it can work itself out: supply and demand. You either fix the supply or stop demanding so much.”