As mentioned in our previous post (Why Might Product Orders Take Longer), disruptions in logistics, material shortages, worker shortages, and a massive shift in consumer behaviour has had a profound effect on all levels of our supply chain from raw materials to transport to suppliers. This disruption has caused delays and price increases across the board. But what has or will the impact be on a consumer level?
When COVID hit us last year, we saw temporary shutdowns, a decrease in man power, increased regulations, a shift from working in the office to working at home, and other COVID shocks that had enormous impacts on the economy as well as our lifestyle.
Our new home body lifestyle (working from home, eating out less, figuring out how to entertain ourselves in isolation, staying fit, etc.) has altered our spending patterns, throwing a curve ball into an already unstable supply chain. This left manufacturers, companies and shipping industries frantic to quickly transition to the new source of demands while also dealing with shutdowns, increased regulations, and less workers.
“There are so many moving components that have to just fit together to deliver the product to the customer on time, and any breakage in any of these links will affect the timing [and] sometimes the end result,” Nikola Dimitrov, a vice-president with AIS Technologies Group in Windsor, Ontario. (CBC)
If you’ve gone grocery shopping, tried to buy an appliance, a vehicle, a gaming system, stepped foot into a hardware store, or even paid slight attention to the news, you have witnessed the domino effects caused by COVID-19.
Lumber prices are at an all-time high with lumber costs spiking 180% since last year. (13KROG) As our offices moved into our homes, there was a need for more space and more renovations along with now having the time to fix up that porch you always wanted or that fence that needed fixing. As demand increased, again suppliers (who suffered numerous shutdowns and worker shortages) were left frantic to keep up.
This same high demand, low supply is happening in other industries too. There has been an increased demand for video game consoles, computers and other home electronics. This demand (which has a direct correlation to) and the shortage of microchips will leave you waiting patiently for any appliance, smart phone, new vehicle, and more.
Through all of this, we realize how deeply weaved global trade is. The parts and assembly of your smart phone have travelled between at least three countries.
“Products typically need parts from multiple countries, so it’s not as simple as keeping manufacturing at home” Will Mitchell, Professor of Strategic Management at the University of Toronto’s Rotman School of Management. (CBC)
Groceries are expected to increase in price (if you haven’t witnessed this already) – mainly due to the same factors of supply and demand. “The average Canadian family will pay up to an extra $695 for food next year” (CTV News)
Many companies are now deciding to trickle the extra expenses down to the consumer as we start to see a recovery in the economy.
WHAT CAN WE EXPECT NEXT?!
Many companies are now deciding to trickle the extra expenses down to the consumer as we start to see a recovery in the economy. Companies are facing an increased cost of business and supplies. Unfortunately, someone has to pay for all these extra costs. In many cases it will be the consumer.
Economists predict we will continue to see higher price tags in the coming months. They also predict these price increases will only be temporary and are hopefully “not expected to be sustained”. (Investment Executive)
Through perseverance and support, we can get through these times together. If you would like to read more, please check out the resources below.
Share your feedback. How have you been affected as a company or as a consumer? Please share your stories and how you are persevering.