Will supply chains ever return to “normal?”

Considering the unprecedented economic environment created by years of COVID pandemic, it should hardly be surprising that organizations around the world continue to suffer from a disrupted supply chain. Yet, many executives are beginning to chafe from the restrictions of unavailable materials and delayed shipments, and almost everyone is eager to know: When will the supply chain get back to normal?

However, more and more economists are hung up on that first word, “when.” The global economy has experienced significant upheaval over the past few years, and many major organizations have radically shifted operational strategies to account for new forces during and after the pandemic. The truth is that supply chains could never become what they were in 2019 and before — but that doesn’t mean they won’t operate with efficiency and effectiveness into the future.

The supply chain crisis is no longer a crisis

Experts first began to anticipate supply chain disruptions at the very start of the COVID pandemic, when manufacturing around the world shut down in an attempt to thwart the spread of the virus. Transportation lines, too, were halted in many places, and because a large number of consumers were unemployed, many consumers put their purchasing on pause. Through the end of 2020 and the beginning of 2021, fears waned, and frustrations skyrocketed, leading to a surge of consumer spending — but because demand had been so low for so many months, many businesses did not have the inventory on hand to meet supply. Businesses rushed to make orders, but manufacturers were slow to respond due to continued COVID restrictions and other issues.

Throughout 2021, the global supply chain was in serious crisis. Many products would sell out as soon as they became available, which drove up the price of some incredibly important resources. Rising prices coupled with rising inflation slowly cooled consumer spending, to the degree that businesses at every level of the supply chain were able to catch up to demand. Today, though some products remain in low supply, there is hardly any fervor surrounding the restocking of regular items, and for the most part, consumers can find and acquire the products they need and want.

Economies around the world are still reeling from the aftereffects of the pandemic, and supply chain disruptions continue. Fortunately, in the United States, the supply chain crisis is no longer in effect, and both companies and consumers can find an easier balance between supply and demand.

New supply chain strategies are paying off

Hit hard by disruptions throughout the pandemic, many companies have made major changes to their supply chain strategies to improve their resilience into the future. Some of these strategies include:

• Investing in more safety stock. Safety stock can protect a business against supply chain delays or demand surges.
• Allowing more generous time buffers. Businesses are making materials orders before demand spikes to protect upstream and downstream processes.
• Diversifying supply network. Also called multi-sourcing, this strategy involves developing relationships with multiple suppliers or suppliers with capabilities in multiple locations.
• Relying upon data-driven forecasting. Advanced software tools can more accurately predict rises and falls in demand to provide businesses insights into when to order more supply.

Additionally, many executives lacking supply chain experience are engaging with operations management courses to better understand existing and evolving supply chain strategies. When more leaders within an organization have a foundation in supply chain knowledge and skill, the organization as a whole can develop more resilient strategies for managing the supply chain.

The global supply chain could be of the past

Perhaps one of the most interesting supply chain strategies to emerge at the end of the COVID pandemic is the shift away from a global supply chain. Different countries have different supply chain challenges for companies to face, and large corporations with sourcing and manufacturing nodes spread across the world map must navigate an overwhelmingly diverse number of challenges to ensure their final products are available to consumers. Frustrated and exhausted with tracking obstacles such as COVID regulations, local legislation, natural disasters and more, many business leaders are scrapping their global strategy and localizing their supply chain for simplicity and effectiveness.

Many economists believe that the supply chain will never again function exactly as it did in late 2019. When faced with such significant disruptions, executives have pivoted their strategies, and they are unlikely to return to a system that was so fragile. Still, the world is rapidly approaching a new normal, and both companies and consumers will settle into stable supply chains soon.