Supply Chain Jenga: Be Careful What Piece You Remove Next
Supply chain problems dominate the news and pose some challenges to the pork sector, too. When I order groceries and dry goods from one of my local big box grocers for home delivery, I usually only get between 70% to 85% of my order fulfilled. That would be a deal breaker in non-COVID-19 times.
Newly mandated COVID-19 vaccination “passports,” too-generous unemployment payments and cash giveaways are keeping people from returning to work. The battle over forced vaccinations and other generalized disruptions are creating shortages around the world most of us thought were well behind us in the modern age.
Panic Buying
After all, inventory management has been the key driver in most of the modernization and cost reductions captured in the food and goods markets over the past 30 years. All those magnificent accomplishments are only as strong as the underlying workforce and its dependability.
Some of the problems are almost outrageous in many people’s minds, such as literally not being able to buy gasoline and diesel for cars in the United Kingdom for days on end. There is no shortage of fuel – there is a critical shortage of distribution truck drivers to haul it to local stations. We are being told many kids will be crying on Christmas morning when stockouts throughout the toy departments become more critical as people rush to stock up and avoid the disappointments.
This is one of the problems with supply chain failures — they produce panic buying, which exacerbates shortages for weeks. We know pork in cold storage is well below normal and not being quickly restored (as of mid-October). This means Christmas hams could be in very short supply, not only from an inability to purchase, but also from failures in distribution networks related to employee shortages.
Workforce Woes
I spoke with a major supplier/processor of bacon and ham last week and they were nearly in a state of despair regarding availability of the quantity and quality of raw product they need for processing. However, even more vexing is the chronic reduction in their workforce. They have upped their starting salaries by 50% and still are 25%-plus short on a full workforce. The higher-than-normal salaries raise costs and bring in people who need to be trained, delaying fully competent and efficient execution of the plant. Unfortunately, many of them, attracted initially to the high-sounding hourly rate, decide this isn’t for them and leave sometime soon after training, forcing the whole process to start all over again.
Fuel Failure
Just a few short months ago, the world was awash in oil, natural gas and fuel for trucks and automobiles; and now, oil prices approach their highest prices in many years. So far, price is doing the rationing along with reduced activities related to lingering COVID-19 restrictions and/or fears. We could conceivably have some other forms of rationing if the demands for vaccination proof or “passports” as a condition of a job are pushed to the limit.
A Giant Game
A long time ago, President Ronald Reagan fired a good portion of the Federal air-traffic controllers for illegal slowdowns and work stoppages. That seemed like a gutsy move at the time, but today there are substantial percentages (30% to 60%) of airline pilots, military personnel, hospital and clinic nurses and doctors, teachers, police, firefighters, truck drivers, utility workers and federal government workers (including USDA) who are refusing vaccination and therefore have become subject to termination.
The firings have begun and will continue through Thanksgiving. It is estimated in the military that 80% to 90% of special forces personnel are refusing vaccination and are subject to discharge. Politicians at the federal and in (some) states are playing a giant Jenga game with the integrated supply chains and national defense of this nation. You pull out the wrong piece and the whole system collapses.
For years, our supply chains and their workers were the unsung heroes and silent performers in the background that made life in the U.S. good, efficient, predictable and affordable. Without predictability in the supply chain, investment in future production starts coming to a grinding halt. Let’s hope we restore that system soon, for without it, we all go back to “hunter-gatherer” mode with a garage full of hoarded toilet paper and sanitary cleaning supplies as our bartering currency. The car that sits useless, empty of gas has been pushed out into the driveway. When it morphs into critical shortages of food products, expect law and order to erode quickly.
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