Supply Chain Problems Brought About By Covid-19

in LeoFinance •  3 months ago 

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I've seen people talk about supply chains suffering from serious problems caused by the pandemic. Demand in many sectors has change abruptly, above all, in the energy sector. The price of oil was negative for a while in the spring. It stands to reason to expect bigger problems down the line as the effects of the demand shock reverberate across the world economy.

I've seen American Hive users write about empty shelves in supermarkets. There have been shortages of some food items at least occasionally. @preparedwombat has written about that occurring in upper middle class districts in the Minneapolis-St.Paul metropolitan area in Minnesota. He told me southern Minnesota is part of the agricultural heartland of the United States. Geographical distance from farms to processing plants to consumers should not be an issue.

I haven't seen any empty shelves in Finland at all during the pandemic except for toilet paper when people were hoarding it in the beginning. We frequent two very large supermarkets that have tens of thousands of different kinds of items for sale. Not once have I seen the supply of entire product categories affected by the pandemic. I recall a Dutch Hive user telling me that he hasn't seen any shortages, either.

The price of food in the US is generally lower than in Finland. I have no real insight into the logistics and supply chains of food or the most common consumer items in any country. But I wonder if the US has significantly more optimized supply chains: less storage capacity, more reliance on just-in-time delivery, storage-on-wheels etc. resulting in a system that is somewhat more sensitive to shocks.

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The population of Finland is 5.6 million. That of the USA is 330 million. I wonder if this has anything to do with it. I recall news articles about Tyson Foods Inc having to close down large pork processing plants owing to many workers catching Covid-19 at the same time last spring.

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There has been some empty shelves at grocery stores in the United States. Especially early into the pandemic, while I was in Philadelphia, and consumers stocked up on food (and toilet paper). I've heard people complain about increasing food prices. But myself I haven't noticed much price increase.

If anything, we're getting deals of a lifetime. My mother @hirschey is an avid grocery shopper who leverages coupons and sales to their fullest capacity. This summer we'd frequently get 10 pounds (4.5 kg) of chicken (with bones) for $4.00. Combined with my mom's shopping and the produce from our garden, we'd often eat a deluxe meal for 4 for under $5 in groceries. Right @trang and @jhimmel?

In fact, there is still an incredible amount of food waste and discarded food in the U.S. It is quite possible to live only on excess food from grocery stores by doing something called "dumpster diving".

I know what the expression "dumpster diving" means. Our language has the exact same expression. It's a thing here, too. Donating food that is just past the best before date is organized to a degree by charities.

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But I wonder if the US has significantly more optimized supply chains: less storage capacity, more reliance on just-in-time delivery, storage-on-wheels etc. resulting in a system that is somewhat more sensitive to shocks.

Yes and this seems to be a big part of the problem. Many stores don’t have a real “back room” where the store extra stock, just a bit of receiving space for when supply trucks come in, but stuff is moved to shelves right away. About a generation ago there was a big push toward Japanese-style supply chain efficiency. It works very well when it works but everything becomes much more interdependent. It’s an efficient system, but not a resilient one.

It's 2020 and just-in-time delivery is a big thing in the rest of the world as well. But there has to be an explanation for the shortages in the US. I've seen pictures of empty shelves in American supermarkets. I've not one seen an empty shelf here. Maybe it's the case that in the US retail logistics is optimized to an even greater degree. Or maybe it's a combination of factors.

I believe it might be easier to make JIT more robust in Japan than in a much more sparsely populated country like the US. Supply routes are obvious shorter in Japan. Not only are there much more people per square mile in the whole country in Japan but due to the fact that the interiors of the main islands are mountainous, the populated areas of Japan are ultra-dense in population.

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Most retail stores have daily deliveries and the warehouses though massive turn things around normally within 72 hours. Perishables are normally supplied directly by companies and the rest comes from a central warehouse. Shortages should not be a problem as distribution warehouses still work under lock downs but have teams in bubbles. The food industry is the one industry that hasn't really been affected by this pandemic.

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Yes, this must be the case. Have there been any shortages in food items or categories of food items in your area in South Africa during the epidemic?

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None really except for toilet paper right at the beginning in March. Prices have rocketed up though like my normal not so flashy coffee up 50 % which makes no sense.

The high rate of consumer price inflation in SA could be due to factors other than Covid-19.

Agreed but believe the items that have shot up lately is down to covering losses by certain companies. The special is now the old price on many items and these items are not imported but made locally. The Government has been printing money as well to cover their expenses but that is another story.