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'Spiraled out of control': Why the pandemic is still impacting supply chains

Lumber prices
Posted at 5:52 PM, May 05, 2021
and last updated 2021-05-06 18:46:48-04

KANSAS CITY, Mo. — Between home improvement projects and new construction, lumber is in high demand.

There's a nationwide shortage, and prices are skyrocketing.

Lumber is just the latest on the list of products that have been impacted by the pandemic.

Early on, panic buying of toilet paper emptied shelves and heightened demand for disinfecting wipes and cleaning products to combat the coronavirus, had the same effect.

"Every time we speak about availability of products, items on a store shelf or in a lumberyard, the fundamentals of the supply chain are the same," Dr. Rafay Ishfaq, Associate Professor of Supply Chain Management at Auburn University said.

The equation places supply on one side and demand on the other. The goal is to stock up on inventory to meet any changes in demand, but it's a delicate balance.

The pandemic made that clear.

"Once it came out of alignment, it just spiraled out of control," Lisa Anderson, president of LMA Consulting Group, said.

All around the world, factories shut down as consumers burned through existing inventory.

"We have our production back on line, everything is being produced at full capacity, but we don't have those inventory buffers anymore. So whatever we make, we are consuming," Ishfaq said.

While the U.S. is open, in some countries production isn't back in full swing. For example, India is at the height of its COVID-19 crisis.

"All it takes is one person in that chain to get a product from India at the moment and the whole chain is off kilter again," Anderson said of the ripple effect.

Products like lumber, which are in high demand and short supply, are more expensive right now. Ishfaq said the prices will drop as demand dies down and consumers turn to substitutions to save money.

"This is a matter of time. It's how long do we have to create these inventory buffers?" he said.

However, Anderson contends there's no "back to normal" when it comes to her client's supply chains.

"What they've realized with the pandemic is they've taken on way too much risk. They're too dependent on suppliers halfway around the world and they don't have the ability to meet changing customer demands quickly," Anderson said.

She works with companies that specialize in building and construction products, food and beverage, aerospace and defense, and health care and bioscience. She said her clients are looking into "reshoring," or moving production back to the U.S., to strengthen their supply chains and cut down on empty shelves.

"I believe that a year from now, for sure, we are going to be set up to be more resilient," Anderson said.

41 Action News asked the experts if any other shortages are on the horizon.

Ishfaq explained it could really happen with any product, if there's a seasonal peak or surge in demand in a short period.

One phenomenon he's watching involves ocean containers used to ship goods from overseas to the U.S. Since our country isn't shipping anything back, the containers are piling up here.

"There is this new problem brewing, where there's a surplus of empty containers that needs to go back out to their origins, so they can be filled up and sent back over," Ishfaq said.

Meanwhile, another brewing crisis has to do with manpower.

There's a nationwide shortage of truck drivers, and Anderson said ports and factories are struggling to find employees to keep up with rising demand.