Why are there so many shortages? Find out what’s happening with the global supply chain

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PEORIA, Ill. (WMBD) — From coffee to cotton to computer chips, plus paper cups and plastic straws, small businesses may be having a hard time restocking some items.

Industry Brewing Co. in Peoria is just one example.

“We tried to reorder some simple things, like basic glassware, and the suppliers just don’t have them. So it takes months on end just to get anything in,” said Chad Ashpaugh, general manager at Industry Brewing.

Daniel Stanton is an adjunct professor at Bradley University in Peoria. He also trademarked his nickname: “Mr. Supply Chain.” He said the shortages are not a matter of less product, but actually getting it in the hands of the consumer.

“We have the stuff, it’s just in the wrong places at the wrong time,” Stanton said.

The global supply chain is facing what’s called the “bullwhip effect.”

“If you have a relatively small but sudden change in supply or demand, it creates a ripple that goes through the system,” he said. “But what that ripple does, is it tends to get amplified as it moves upstream.”

The pandemic, Stanton said, is the big disruptor of the global supply chain.

“When things opened up, we’re now seeing this surge,” he said. “All of the sudden, that surge of trips tries to come into port all at the same time, when the port can’t handle that many, and we’ve had these surges where everybody’s trying to ship things at the same time. Well, there aren’t enough containers to carry everything all at once. There aren’t enough trucks to haul all of the containers all at once.”

Small businesses, he said, are paying the price of the ripples.

“We’ve been lucky enough that we can find something to substitute in the meantime,” Ashpaugh said. “For our suppliers, it’s got to be rough on them.”

According to Stanton, there are two types of inventory: just in time and just in case. He said businesses who lack the security blanket of “just in case” inventory are the ones who are now in trouble.

Stanton said there are several options for small business owners who cannot restock certain items:

  1. Look for an alternate supplier: this may mean paying more money or settling for lower quality items.
  2. Substitute the materials with something else.
  3. Conserve the inventory: use less of what you have to make it last longer.
  4. Go without that product.

Small business owners should invest in that “just in case” inventory as a safety stock.

“Nobody wants to have the money for the business tied in inventory that’s just sitting there, but you have to think about it like an insurance policy, right?” Stanton said.

Ashpaugh said the products he has trouble restocking are very random. Stanton said the particular products running out on store shelves simply depend on which containers made it to port, got unloaded, and which did not.

The supply chain issues will continue through the holidays, he suspects, but may settle down near February 2022.

The full interview with “Mr. Supply Chain” can be found here:

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