Evolving Beyond Supply Chain Disruptions: Entering the New Normal

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Introduction

A supply chain disruption is an event that impacts the production or distribution of goods within a supply chain. They happen all the time, and the degrees of extreme vary.

Supply chain disruptions include forecasting and allocation errors—too much or not enough inventory, unpredictable surges in demand that create bottlenecks and stock-outs, geopolitical events like the trade wars, customs delays, labor shortages and strikes, mechanical issues in manufacturing plants, major weather events— the list goes on.

Here are a few recognizable supply chain disruptions from the past:

• Hurricanes Katrina, Harvey, Sandy, Irma, and Michael: In the last 15 years, major hurricanes have significantly impacted regions across the U.S. and Puerto Rico where damages ranged between $50B to $160B
• 2018-2019 trade wars: U.S. and China went head-to-head on trade, which resulted in sky-high tariffs being placed on common imports and exports.
• The Volkswagen diesel-emissions scandal: VW had 70% of the U.S. passenger-car diesel market and had to recall more than 500k cars in the U.S. and more than 10.5 million worldwide
• Ongoing labor shortages in long-haul trucking and transportation create bottlenecks, having downstream effects as capacity constraints limit the movement of goods
• The Tickle Me Elmo craze in 1996. After Rosie O’Donnell randomly promoted the new toy on her talk show, there was a surprise surge in demand, however, not enough units were available nor could they be produced quickly enough to meet demand—leading to one very coveted Tickle Me Elmo going for the price of $1500

No matter the scale, disruptions are disruptive. However, most supply chain disruptions are relatively singular in nature—there is a scope to each event. That is not the case for COVID-19.