While the post-COVID supply chain woes are truly global, Southern California may have the best visual image of the disruptions, as cargo ships in the ports of Los Angeles and Long Beach wait to unload containers.
But from workforce disruptions in key manufacturing hubs, such as Southeast Asia, to driver shortages in the U.S. and elsewhere, the clogged seaports are only the middle of the jam that threatens the global economy over the coming months.
Min Choi, assistant professor of management at Cal State Fullerton’s College of Business and Economics, sees beyond the pandemic to the high cost of labor in developed countries as the genesis of today’s supply chain woes.
“In advanced economies, labor is expensive,” she says. “Local U.S. labor is more expensive than in Bangladesh, Malaysia or Vietnam. We rely on other countries so much. We buy a lot of products like toys and clothing that are completely made in parts of Asia.”
Taking Action to Get the Supply Chain Moving Again
In October, President Joe Biden announced an increase in port operations, while Los Angeles County officials have imposed fee penalties on ocean carriers that leave containers on docks for more than nine days.
All of this is a bid to get the supply chain moving again, but the current crisis, which began when factories were idled or marshalled for pandemic needs in 2020, is much deeper, according to Choi. She points to burnout among truck drivers and warehouse workers, coupled with the “Great Resignation” impacting all industries.
But there’s no better time than the present to rethink corporate policies, such as lean operations.
“Having inventory maybe works out better,” says Choi. “In times like this maybe you could be less lean. Maybe it’s time to shorten your supply chain a little bit. With a shortened supply chain this problem would not be eliminated, but the severity will be reduced.”
That might mean more products created, produced and consumed in a single country or region, rather than in different parts of the world.
While it might seem to be a step backward from the global economy touted in recent decades, a shorter supply chain has environmental benefits, as well as minimizing economic disruption.
Holiday Consumer 101: Navigating the Bottleneck
While the corporate and political world works to reassess practices and address the supply chain crunch, what are consumers to do with the holiday shopping season around the corner?
Buy local is one solution. “If you’re buying locally made things that use local labor and don’t have to be driven around the world, this could be a great way to handle the situation,” says Choi.
It might be more expensive, and you might not be able to find that designer toy your child craves, but you can ensure you’ll receive your items on time, and you’ll be helping the local economy and small businesses, too.
Gift cards are also a great gift, says Choi. As federal law states that gift cards can’t expire for five years; recipients have the ability to wait for the bottleneck to resolve and then go on that shopping spree.
And Choi recommends the obvious – start gift-buying now. Don’t wait for Black Friday, and certainly don’t wait for the weekend before Christmas.
Read Choi’s full perspective in this article in The Orange County Register.