Top 5 Supply Chain Issues in the Federal Government… and What’s Being Done About it

1) Long lead times and materials shortages — Complications at ports mixed in with lockdowns have led to unpredictable wait times causing a massive materials shortage. The Federal Government outsourced much-needed medical equipment from Mexico, China, and other countries during this time. Many companies even resorted to outsourcing as a way to save money. 

2) Increasing logistics costs — Logistics costs continue to rise due to trucking hardships, exacerbating supply chain issues. Diesel fuel is at an all-time high with no indication of declining anytime soon. Labor costs also continue to rise due to inflation, which includes the trucking industry’s continuous and long-lasting driver shortage. 

3) Changing and unpredictable consumer demand — Due to the pandemic, consumers’ needs have shifted. They started to buy in bulk not knowing when they would be able to get back to the store. This resulted in consumers shopping less frequently than they normally would, which led to suppliers producing more materials to keep up with the increased demand for certain items.  

4) Manufacturing constraints and inflexible operations — Rising demand for certain products and a shortage of workers have led to inflexible operations. Certain equipment was used for producing a particular amount of goods, but when the demand for goods increased, the equipment had to handle larger quantities. For some equipment types, it was nearly impossible to keep up with the increased demand for goods. Not only were companies facing equipment hardships, but they were also faced with an insufficient number of workers needed to fulfill the increase in orders. Production, flow, and storage constraints all played a huge role in the supply chain domino effect. 

5) Environmental risk and natural disasters — Extreme weather conditions, natural disasters, and geopolitical events can also negatively affect the supply chain. For example, the Texas freeze in February of 2021 caused the worst involuntary energy blackout in U.S. history. The outages forced semiconductor plants and railroads to close. These closures ultimately caused major supply chain links between Texas and the Pacific Northwest for three days.