LEXINGTON, Ky. (LEX 18) — Months into the pandemic, consumers still cannot find products they want because of a snarled global supply chain.
University of Kentucky Director of the Master of Science in Supply Chain Management Program Haoying Sun explained the first issue suppliers have faced the past few months is the challenge of obtaining raw materials because of travel restrictions.
"The second part of it is more related to the mismatch of the demand and supply," said Sun. "So for example, a good example will be at the beginning of the pandemic. When we went to the grocery store we couldn't find x, we couldn't find milk, right? But then, at the same time you read the newspaper. You hear you know the diary farmer in Texas actually couldn't sell the milk, and they have to dump the milk. So you're like what's going on, right? And that's a typical problem of demand supply mismatch. Because each type of product has its own unique distribution channel, so they have different manufacturers who produce two different standard has different kinds of packaging subject with different kind of certification on qualification process."
She said as much as product forecasters have learned in the past few months and as much technology that they have to avert crisis, something like a pandemic is incredibly difficult to plan for.
"There are different levels of disruption," Sun explained. "The smallest will be there [is] a fire on the highway so the highway will shut down for eight hours or something. Then, it's easy for you just to route another thing from another distribution center or something. And then there [is] the mid-level of disruption, almost like a hurricane is hitting Florida or, you know, a tsunami is hitting Japan. So, then you know you have other regions, if you have multiple suppliers, you know, geographically diversified region, then you're still okay because you know, you know, 'I could insure stuff from Florida but I could still do it from maybe Louisiana,' you know, so you could still manage that. Now when we talk about COVID-19 Pandemic, it's a little bit difficult because it's on a global scale."
Sun also spoke about two Lexington-based companies that were affected differently because of different business models.
"Valvoline was hit pretty hard because they have both manufacturing and the service sector, you know," Sun said. "They produce the oil useful in the oil change like also have a service station across the country, right? And you know, this time the COVID-19 hit the service center sector particularly hard, so they were hit pretty hard on the service side."
Meanwhile she explained, "Alltech is sort of like a doing pretty well, because they're the one who went away saw--saw, you know, China was hit hard in January in February, they start to stock out the raw material and trying to prepare for it. So, then that means they're faring better later, you know. Relatively speaking."
As health experts predict a second wave of the virus, Sun says product forecasters will have some context to work with. But, because of the product log-jam, suppliers will be hard pressed to have production back up to "normal."