When the pandemic hit, it took mere days for supply chain shortages to impact manufacturing plants across the globe. Unable to secure the necessary materials, many organizations had no choice but to slow, or even halt, production. These supply chain disruptions caused a ripple effect that left store shelves empty and consumers struggling to find the goods they needed.

Even with the pandemic now subiding, supply chain disruptions remain. Many experts agree that supply chain shortages could last for at least another two years, if not more.As a manufacturer, you already know that just waiting for things to improve is not enough. Now, is the time to examine your current supply chain processes and strengthen your current supply chain networks.

Before you can start this process, however, it’s important to understand the reasons behind the current supply chain disruptions as well as how this crisis is specifically impacting the manufacturing industry. This article takes a closer look at the impact of the supply chain crisis on the manufacturing industry.

understanding the current supply chain crisis

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what are supply chain shortages?

Supply chain is the backbone of the manufacturing industry. It’s the process of securing the parts, goods and raw materials necessary to complete the production of specific goods and products. Supply chain in manufacturing is extremely complex. It includes networking with various suppliers and managing the shipping and delivery processes.

A supply chain shortage is caused by one or more disruptions in these processes. Disruptions are not a new challenge for manufacturers. What is new, however, is the number of disruptions impacting multiple points in the supply chain process simultaneously. These disruptions, in turn, caused a ripple effect that eventually impacted nearly every manufacturing plant in the world.

why is there a supply chain shortage?

As mentioned above, supply chain shortages aren’t a new challenge for the manufacturing industry. For the most part, companies have learned to mitigate small disruptions without typically causing extensive delays in production. While the pandemic spiked supply chain shortages, the reality is that supply chain challenges are more complex than just one issue. While the current supply chain crisis is likely to be analyzed for years to come, several causes have already been identified, including:

talent shortage

The UN International Labour Organization states that when factoring in both reduced working hours and actual job loss, there was a total loss of 255 million jobs across the globe due to the pandemic and a 4.4% drop in global gross domestic product during the pandemic.

Today, the manufacturing industry is still facing significant labor shortages, which are not expected to end any time in the near future. In fact, the National Association of Manufacturers predicts that over 2 million manufacturing jobs will go unfilled by 2030 in the United States alone. To further escalate things, the growing skills gap is making it even more difficult for manufacturers to find the skilled workers it needs to properly integrate supply chain technology that can help streamline their processes.

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In fact, the National Association of Manufacturers predicts that over 2 million manufacturing jobs will go unfilled by 2030 in the United States alone.


For instance, a backlog, spurred by the labor shortages, at refineries across the world is making it difficult for manufacturers to source the raw materials they need, such as copper, zinc and iron. Significant labor shortages in the transport industry also are making it difficult for manufacturers to both obtain the supplies they need and deliver final products to the consumer.

running close to capacity

In recent years, there has been a trend in the manufacturing industry to physically store less inventory onsite and instead depend on their supply chain network to deliver the supplies as needed. This running close to capacity model helps organizations save money, reduce waste and improve efficiencies in the supply chain process.

For the most part, this business model worked well, and organizations were able to secure the materials they needed when they needed them. Supply chain shortages were often limited to one type of material or to a specific region, and manufacturers were able to find alternative solutions to minimize production delays.

When the pandemic hit, everything changed. Both production and transport of raw materials and supplies came to a halt or were significantly delayed. Due to limited onsite inventories, many manufacturers found themselves facing severe shortages in just a matter of days or weeks.

To overcome this challenge, manufacturers took steps to increase their onsite inventories. These companies had to seek out reliable storage solutions for this increased inventory amidst a global pandemic.

Three people working next to an assembly line with packages.
Three people working next to an assembly line with packages.

lack of diversified supply chain networks

Manufacturers maintain very complex, multilayer supply chain networks to source the materials needed for production. Naturally, most companies seek out cost-effective suppliers that offer the quality materials they want. As the logistics industry has become more globally intertwined, more and more manufacturers began to rely heavily on national and international suppliers, which worked well until COVID-19 hit.

Border closures halted some international trade, making it impossible for manufacturers to obtain the materials needed for production. Even some national trade options were disrupted due to COVID-19 concerns. During this time, manufacturers had to scramble to find alternative local and regional suppliers to fill in the gap. In some cases, this just wasn’t possible, which halted production altogether.

For example, the semiconductor chip shortage led to significant production delays in the automotive and electronics industries. In fact, a recent study shows that the global auto industry lost as much as $110 billion due to this shortage in 2021.

As national and international trade begins to stabilize post-pandemic, 93% of supply chain leaders state that they are committed to building more flexible and resilient networks.

how is the supply chain crisis impacting manufacturers?

The ongoing supply chain crisis is not only frustrating global manufacturers, but it’s also significantly impacting these companies in a variety of ways, such as:

what steps are manufacturers taking to overcome this challenge?

Manufacturers who hope to remain competitive in the years to come must take steps now to improve their supply chain efficiencies. Here’s a quick glance at some steps manufacturers are taking to overcome these challenges.

Download our latest slide show to learn more about the supply chain shortage impacting the global marketplace, including the manufacturing industry.

understanding the current supply chain crisis

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