Supply chain shortages have been the talk of the town, thanks to pandemics. In the year 2021, everything revolved around shortages.
Earlier this year, concerns about COVID vaccination shortages were replaced with concerns about being unable to purchase turkeys or toys.
For the majority of the year, supermarket shelves, automobile showrooms, and even gas stations were significantly less crowded than usual. Some shortages were rectified immediately, while others continue to be a problem.
Supply Chain Shortages – What You Need To Know
In financial terms, a supply chain shortage is a situation in which the quantity requested is more than the quantity available at the market price, resulting in a price differential.
In an ideal situation where demand equals supply, an equilibrium price is determined by market forces. Product or service shortages occur when there is more demand than supply.
As the commodity is restocked and the market returns to equilibrium, this situation should pass quickly. Shortages should not be mistaken with “scarcity” because shortages are potentially reversible and can be addressed.
But the scarcities tend to be structural and cannot be replaced. That is why two phenomena must be studied in isolation.
Also, in a command economy, shortages are a typical occurrence. This is the situation in which the state will not let the free market decide the price of a product based on the market forces. An absurdly high number of customers may choose to buy the item due to the low price.
A shortage of doctors could occur if the state provides free medical visits as an initiative of a universal healthcare plan. People are more inclined to seek medical attention if they are not responsible for the bill.
Factors Causing Supply Chain Shortages
A shortage may be caused by a misjudgment of demand by a firm providing a service or product.
This mostly happens due to its lack of ability to increase production or government measures such as price manipulation or rationing that prevent a company from meeting demand.
Natural disasters can also generate shortages of vital supplies such as housing and food, as well as a rise in the prices of those items.
Consumer and commercial trends around the world can also lead to a shortage of commodities and workforce.
Even though technological innovation has transformed the industry, production and distribution are still primarily reliant on human labor.
When demand increased due to the lockdowns, waves of layoffs in the manufacturing industry resulted in a labor shortage. Take, for instance, the vast outflow of employees from industrial centers to rural areas that occurred in Vietnam and that could not be undone easily.
The Impacts Of These Shortages On The Awards and Personalized Industry
Just like any other industry, the personalized sector has also taken a severe hit due to global supply chain shortages. The awards and personalization industry deals in custom engraved plaques, acrylic awards, and glass and crystal trophies.
Its objective is to give top-quality awards and recognition solutions to its customers while also providing the highest level of customer service.
Ultimately, they want to establish a long-term relationship with their consumers by listening to their needs and earning their confidence. To honor the individual essence of each client, the industry aims to provide them with designs that are both original and inventive consistently.
The industry has always been able to provide excellent customer service and on-time delivery to their customers. The awards industry has always been able to make a difference in the lives of those around them. This has been the case on both local and global levels.
Similar to other industries, customers and businesses owners of the awards industry felt the aftershocks of global supply shortages alike. More than half the total number of consumers reported difficulties in procuring their desired products.
If anyone is to be blamed for difficult procurement, it’s the global supply chain shortage. Manufacturers were having a hard time sourcing raw materials to prepare personalized awards that involved crystal trophies and acrylic awards.
This eventually resulted in consumers not choosing to buy those products anymore. The reason, however, was twofold.
- Timely deliveries became a norm. Most of the consumers that belong to a personalized industry are under time constraints. The consumers didn’t get their orders on time (for obvious reasons). As a result of which, they stopped ordering altogether. The end product, even if it arrived on time, was not easy on the pocket, thanks to the global supply chain shortage. The price of raw materials got expensive, which increased the costs of the end product. As a result of which, more than half of the consumers called it quits, resulting in a huge financial blow to the awards industry
How The Industry Can Cope Up With These Shortages
Following are some of the ways through which industry can cope with the shortages
- In addition to the use of predictive technology and analytics to provide excellent customer service, connecting and collaborating with customers “outside of data” can be one of the most effective ways to cope with global supply shortages. It is vital to consider the service priorities of your clients.
- Having a solid data forecasting and management framework in place is critical for staying ahead of market volatility. The ability to detect variations in consumer demands is critical. Especially when supply chains are “long” and rely on many upstream operations to function properly. To respond to supply chain problems predictably and dynamically, invest in the “finest” analytical and planning tools. It is even better if they include comprehensive scenario-modeling abilities.
It is as true as it gets that global supply chain shortages can break a business. The longer the supply chain is, the more difficult it will get for the company in times of crisis.
It’s about time the personalization industry takes it as a wake-up call and invests in some data-intensive projects. By doing so, the companies will be able to avoid mismanagement.