Harrisonburg, Virginia – As the Christmas season begins, supply chain disruptions are a priority for many consumers. Retailers are encouraging buyers not to hesitate and businesses large and small are adjusting to demand.

William Ritchie, economics professor and supply chain expert at James Madison University, provides answers to some common questions to help consumers shop.

Q: There has been a lot of discussion about supply chain interruptions lately. Can you explain what is happening and why?

Ritchie: The nature of “disruption” is extremely complex because it involves a multitude of interrelated events and activities that appear to be independent. Even the current terminology “supply chain” is misleading as it implies that there is a specific set of related activities that are largely linear. A more appropriate term might be “utility networks”, which are multiple pieces of interconnected parts.

To make matters worse, these networks occur across many levels of buyer-supplier dyads, which means that no single buyer or supplier can easily see activity that is more than one level away from their own transactions. And even if they observe such activities, they have virtually no control over the activities. It is important that although these dyads act independently of buyer-supplier relationships, the effects of their actions extend to several levels in the “supply chain”. Add to this complexity some external forces such as unexpected spikes in demand, labor or equipment shortages, and the supply chain quickly becomes vulnerable.

Supply chains often have a certain amount of leeway to flexibly shape supply and demand. This shortage can take the form of excess labor, finance, information systems and technology, etc. Recently, however, several adverse forces – occurring simultaneously – have stretched many supply chains way beyond their capabilities. For example, the labor shortage is due not only to well-publicized port activities, but also to more subtle changes in the logistics environment.

In the last interviews with truck drivers I learned that a large cohort of prospective truck drivers had decided not to start their careers due to the trend towards electronic monitoring of truck activities and the loss of operator freedom. These problems are confused by the scarcity and associated increasing cost of logistics equipment. For example, in my own experience with the JMU Africa Medical Relief Project (www.hospitalcargo.org) and Mihret Medical Supply, we are now paying $ 5,000 for the same 40 foot shipping container we bought for $ 1,800 last year . Assuming you are securing a container, truck chassis must be available to transport the container. Chassis prices have also doubled in the past 12 months. These conditions alone place a burden on a small but significant part of the supply chain.

Only last month had we found a good source for a 40-foot freight container as well as truck operators ready to move the containers, but the lack of chassis forced us to consider other options. In the import / export scene, too, you have more than quadrupled the costs of transporting a transatlantic container. Again, this is a complicated situation as the containers are typically filled, emptied and returned for immediate reuse. If the containers are connected in a port, in a warehouse or on a chassis, another authority has to do without this container for a while. None of these scenarios take into account the additional challenges on the manufacturing front. This means that all of these logistics resources are not only involved in bringing finished products to market, but also in the transport of raw materials to and from production facilities that often cross international borders.

Q: Two major shopping holidays, Black Friday and Cyber ​​Monday, are just around the corner. How could supply chain challenges affect Christmas shopping these days and beyond?

Ritchie: This will be difficult to predict. Recently, the Association for Supply Chain Management (ASCM) reported that vacation deliveries are weeks, and in some cases months, below last year’s benchmarks. The various interruptions in the supply chain will undoubtedly increase the price pressure on the goods. However, there is also a supply chain phenomenon, the so-called bull whip effect, in which the variance in order quantities grows faster than the demand for the products. In the end, there is a net surplus of goods. Some of my contacts in the supply chain arena point to an impending surplus of goods on the market in the post-Christmas period.

Q: What should consumers consider when planning gifts and get-togethers this year?

Ritchie: If history is a teacher here, I think the crucial word will be “patience” and realizing that in many cases things will not be as extreme as predicted. Remember that during the height of the pandemic there were significant doomsday predictions of all sorts of things. Y2K also comes to mind.

There are also unique situations in which supply chain interruptions are not evenly distributed. In retail, for example, I’ve observed that there are cases where smaller companies are more nimble and have more detailed knowledge of sourcing activities in the supply chain so they can handle disruptions better than some large companies. In transportation, too, travel disruptions seem to affect the larger airlines, while smaller regional airlines maintain high levels of service and reliability.

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Contact: Ginny Cramer, cramervm@jmu.edu, 540-568-5325

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