“Commentary: Caution—Bullwhip Effect Ahead”
Even as the Covid-19 pandemic eases in most of the developed world, current evidence reveals that many firms are about to be knocked off their feet once more. As the pandemic’s rippling effects disturbed established supply-and-demand patterns around the world, uncertainty about demand estimates needed to drive supply-chain choices grew significantly during the last 15 months.
“North America supply chain reshoring will not happen, report says”
Between now and 2025, companies are unlikely to reshore their supply chains from Asia to North and Central America due to high production costs, concerns about the business climate in Mexico, and fears of losing access to billions of consumers in nearby countries. The findings contradict popular perception that enterprises selling to North American markets would transfer their supply chains from Asia to avoid the large and ongoing supply chain disruptions caused by the COVID-19 outbreak.
WHAT CAN WE CONCLUDE?
What does the bullwhip effect mean for the supply chain? It takes time for information about demand stabilization to reach upstream supplies and manufacturers, just as it takes time for information about demand spikes to reach upstream suppliers and manufacturers. Because extensive lead times are required to create capacity
and considerably boost output, the bullwhip effect takes root in supply chains. Demand may have settled at lower levels by the time businesses achieve peak capacity, leaving them with excess inventory.
Amazon claims that robots will not take over human occupations. Since 2012, when Amazon began utilizing robotics in its facilities, the business has “added over a million jobs throughout the world.”
The world’s largest online retailer, Amazon, has a high rate of worker injury. The corporation has stated it intends to lower the rate by half by 2025 and will invest $300 million in safety programs to achieve this goal.
A recent study contradicts the popular perception that enterprises selling to North American markets will move their supply chains
from Asia to avoid the large and ongoing supply chain disruptions caused by the COVID-19 outbreak. Also, according to the EIU analysis, as pandemic-related concerns recede as more people are vaccinated and countries reopen, the emphasis on business resiliency, which was a hot topic in 2020 and early 2021, will decrease as well.
MVP Logistics is here to answer all your questions about your supply chain and what steps to take to plan for and address the expected challenges. For an analysis of your supply chain, contact us virtually or give us a call at 1-888-390-5320.
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