Speaker 1: The retail apocalypse really started to take hold when demand stopped. It stopped because doors were closed. We started to build in delays that once demand started to come back and there was panic buying for some products, we created a choke on supply and excess demand. That's driven up price and customers have been willing to pay it.
Speaker 2: Supply chains that were disrupted during the global health crisis, still face huge challenges, including [00:00:30] work shortages, shipping delays, and a lack of key components. Many are struggling to bounce back. The disruptions to the global supply chain has consumers worried about the holiday shopping season so much so that many consumers started shopping early amid fears that presence won't reach their final destination in time
Speaker 3: Before the pandemic people would ask me, you know, what, what do you do? And I'd say, I'm a professor. What do you teach? Supply chain? Nobody knew what it was.
Speaker 2: [00:01:00] Most people think the supply chain is linear a straight line with products, moving from manufacturer to delivery and finally to the consumer, but even on paper, it's not that simple.
Speaker 3: And so if I'm a manufacturer, I could have suppliers all over the world, but they then have suppliers and they have other customers. And those suppliers, suppliers have. And actually when you start mapping them out, it doesn't look so much like a line, but a big web of companies [00:01:30] that are all really working towards getting products again from a raw material, transforming them and getting them into our hands. But every one of those companies could be working with multiple, uh, parties and, and likely are
Speaker 2: The global supply chain is so intricately woven that a small glitch can quickly amplify and disrupt its flow. This is called the bull whip effect,
Speaker 3: Think of Indiana Jones. And so if you flip one end where you're holding the whip, it's a very small flick [00:02:00] of your wrist, but as it moves to the supply chain, it becomes bigger and bigger and bigger. And so any small change in demand can grow and grow and grow. So a disruption that happens at one spot doesn't end there, it could perhaps get worse as it travels up or down. Um, the supply chain,
Speaker 2: The best example of the bull whip effect is the chip shortage, microchips power, everything that runs [00:02:30] software, including smartphones, home electronics, and even cars. The shortage in chips triggered by a production lag early in the pandemic followed by Sur demand means manufacturers are struggling to produce enough computer phones and tablets to fulfill orders, which sword during COVID lockdowns,
Speaker 1: Even seemingly innocent component parts can result in the larger finished product being in limited supply to [00:03:00] storage and, and just the ability to T to transport product from one area distribution center to the end consumer.
Speaker 2: But it's not all on retailers and suppliers. Consumers also played a role in disrupting the global supply chain and the early weeks of the pandemic panic buying caused shortages, the sharp increase in demand left retailers unable to maintain enough supplies of products like toilet paper and hand sanitizer,
Speaker 1: Grocery store, [00:03:30] particularly in urban areas. There's not a lot of back stock. You rely on very tight turnaround of delivery times and volume of distribution in order to keep customers happy. And when there was panic buying at the outset of the pandemic, um, those shelves were empty and they couldn't get the trucks in to replace the product. Fast enough.
Speaker 2: One of the big guess concerns [00:04:00] consumers have around holiday shopping is shipping delays in a parcel lab survey. One in five consumers said they started shopping earlier this year, specifically citing concerns over shipping delays, a key variable in the global supply chain. One, that's taken a hit over the past 18 months amid the coronavirus earth pandemic. Here's how global shipping works goods from overseas are loaded into shipping containers before being sent abroad. After they reach their intended port, the [00:04:30] products are unloaded and sent to warehouses across the country, but that process isn't happening very quickly. Right now. The shipping slowdown is caused by a variety of factors by surplus of products, moving through the system.
Speaker 4: Uh, since the start of the pandemic, people are rethinking they're in their homes, they're buying new, new things, they're moving into bigger homes. And so they're now buying more stuff, um, uh, to, to, uh, to have their homes and stuff like that. So on the one hand demand is going up on the other [00:05:00] hand, the cost and hence the supplies going down, and that is causing a pretty big, uh, problem and potentially gonna be re uh, uh, is, is causing risk to the economy
Speaker 2: With so many products arriving at already overcrowded and under labored ports, logistics companies. Aren't always able to hire enough truck drivers to deliver for the goods and unload the containers at their warehouses around the country. Shipping has also gotten choked up due to COVID related port shutdowns. [00:05:30] For instance, in early November, the number of container ships waiting to enter the port of Los Angeles, the busiest USC port complex hit a new record of 84. The bottle neck at the port of Los Angeles may last until 2023, before it catches up to prior pandemic levels and the highly contagious Delta and O crown variants could bring further port closures in the future. The combination of disruptions has caused the cost of shipping to skyrocket, making it even harder for [00:06:00] companies to import goods.
Speaker 3: So we're seeing a combination of a lot of things, a lack of capacity constraint, uh, with, within shipping, once it does get through the ports, um, we're having constraints in terms of shipping from the ports, um, to, to the next location in the supply chain. But without a doubt, we're seeing this across the board,
Speaker 2: According to a survey by survey monkey, the average holiday gift [00:06:30] budget for participants was about $800 a number below the typical $1,000 budget for us families, which includes travel and other expenses. Some experts attribute this paired down holiday budget to rising inflation
Speaker 1: Inflation in large part is caused by two little supply and a lot of demand. Now, certainly brands manufacturers, retailers are absorbing some of the additional costs of, uh, [00:07:00] distribution and logistics that we've seen through labor shortages, uh, that are delaying product getting to stores. Um, but for the most part that is get going to be absorbed by
Speaker 2: Customers. The Biden administration and the federal reserve have argued the at rising prices are largely result of the pandemic. And while these rising costs may be temporary, it's certainly hitting consumers going into the holiday season. [00:07:30] It's hard to say how long supply chain disruptions will last, but experts agree that they will most likely extend beyond the COVID 19 pandemic and finding solutions to address these issues may even create new ones. The
Speaker 1: Inflation rate is expected to continue to rise, uh, for the foreseeable future. Then the trickle effect of that is, is certainly going to, if not continue the, the supply chain problem, it's going to create new ones.