Supply Chain Shortages Explained

Carole:

Is it just me, or do I know you from somewhere?

Anyways, I have a question for you. Do you know what cream cheese, exercise bikes, and microchips all have in common?

Katherine:

You already lost me. What is it?

Carole:

These products have all been impacted by supply chain shortages. These shortages are nothing new, but major events like a pandemic or a war can disrupt the flow of manufacturing, shipping, and so on. The whole system is out of whack.

Katherine:

Is that why I can’t find a better phone?

Carole:

It could be. A lot of products rely on microchips. Take automakers, for example. They stopped ordering the chips needed to make cars because they didn’t expect demand to go up during the pandemic. Meanwhile, semiconductor companies were fulfilling the orders of the industries that

did

expect the demand.

Katherine:

So what happened?

Carole:

Well, chip suppliers didn’t have any inventory set aside for automakers, so we experienced a shortage. Since then, it's been hard to catch up with demand, especially when finding workers has been so difficult.

Katherine:

Are shortages like this common?

Carole:

The short answer is no. This is the first time global supply chains have really been tested, and it's showing all our weaknesses in our current system. Eventually these issues will work their way out, but in the meantime, I would expect some delays and shortages.

Katherine:

That's good to know. See you around.

Carole: You're welcome!