What is Supply Chain Crisis and why is it in crisis?

admin April 20, 2023 0 Comments

The world is currently facing a severe supply chain crisis, and in general, supply chains mean the arrival of the product to the consumer, through the process of transportation from the place of production to the port, then transportation to the port in any country or even within the same country, then transportation to consumers around the world, and cause problems associated with chains The global supply of products is in short supply during the Corona pandemic, which led to a significant increase in prices, as a result of lack of supply and increased demand, and in this article we will discuss the supply chain crisis and how it occurred, as well as how countries will confront it.

Supply Chain Crisis Risks

There are huge risks to the supply chain crisis, which has left store shelves empty with long shipping delays.

Countries are working hard to try to solve this crisis that negatively affects global and local economies as well.

Last year the global economy stopped working, but this year the wheel has turned again and is caught in one of the largest supply chain crises in history.

The new indicators confirm the severity of the problem, the failure of the world to find a quick solution, and how the great crisis of 2021 is still getting worse in some regions.

One of the most important risks of the supply chain crisis is that it will cause companies to lose materials used in manufacturing and production,

And the other scenario is that companies produce finished products and there is no buyer for them.

So companies need to put in a huge effort to properly manage their supply chains, along with the need for sales forecasts and operations to make sure demand is known.

Especially since the supply chain crisis threatens with more massive changes that will clearly negatively affect companies and production processes.

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The supply chain didn’t recover from COVID-19

Since the early 1990s, global supply chains have been maximizing efficiency, and companies have sought to enhance their degree of specialization and focus on particular tasks in places that offer economies of scale.

But now there are growing concerns about the various repercussions on supply chains, as supply chains have not yet recovered from the Corona crisis,

Especially since there are a large number of sectors around the world that have been significantly affected by the pandemic.

Global supply chain crisis


The COVID-19 pandemic has caused a major shock to supply chains around the world, with markets at one point facing a huge and sudden surge in demand that was immediately followed by a severe drop in demand.

This is in addition to disruption in production cycles in most companies due to the continuous closures that occurred due to the Covid-19 pandemic.

Therefore, the supply chain crisis is a global crisis that will make companies need to know the change in market demand for their products and how they will manage their cash flows appropriately during that crisis so as not to collapse and lose their own market.


Why the supply chain is in crisis

The reason why the supply chain is in a major crisis is the Corona crisis and the repercussions it has imposed on the economies of the world clearly.

Currently, it has made the economy suffer from a large gap, so the store shelves have become empty,

And this happened due to the shortage of raw materials in companies, and the frequent closings of factories.

This is in addition to the lack of sufficient drivers and consequent disruption of cargo operations,

In addition to the high demand for sea and air freight, and the insufficient infrastructure.

Generally speaking, supply chains depend on people and equipment, and if there are any disruptions to them, the supply chain will face a huge problem in return.

This was clearly evident in the United States of America, which has clearly become out of products.


Getting serious about solving the supply chain crisis

A large number of countries around the world are trying to think of a way to help them seriously solve the supply chain crisis,

Especially as it has greatly affected, as we mentioned, the economies of a large number of countries.

Although the supply chain crisis is complex but solvable, all countries need to be serious about delivering the right mix of targeted policies along with capital investment in their infrastructure.

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