During the last 16 months, the Covid-19 pandemic has plagued the supply chain. Specific industries, like construction with lumber shortages and the automobile industry with microchip, continue to slowly recover and still have a long way to go.

But the new variant of Covid-19, known as the delta variant, could stand in the way of a full recovery being around the corner. And it has yet to be seen how this variant, which has spread rather quickly over the last several weeks, could hamper this recovery in an already tightened supply chain.

How is the variant impacting supply chain?

While leadership, including Dr. Anthony Fauci, has claimed no lock downs are around the corner, the numbers are certainly worsening. According to the Washington Post, cases rose by 55 percent last week. Additionally, deaths rose by 29 percent and hospitalizations rose by 42 percent.

Last week, the CDC has made recommendations for mask mandates to be back in place for even those who are unvaccinated. These mandates have been put back in place in some spots across the country including Washington D.C. and Las Vegas, and implies the possibility of more potential restrictions around the corner.

At the moment, it does not appear that the delta variant will create shutdowns comparable to what was put in place at the onset of the pandemic in March. But, this does not mean there will be no measurable impact on supply chain.

According to Reuters, several countries in Asia saw a decrease in factory production in July that was specifically related to a surge in cases. Additionally, the delta variant’s quick rise has led to many countries not allowing access to sailors – a big problem, considering that 90% of the world’s trade is done by ships.

Just last week, Toyota had to stop production at plants in Asia because they were unable to get parts. U.K. factories were shut down because employees were forced to isolate to avoid the spread of the new variant. According to an executive at a South Korea auto parts producer, a rise in steel prices related to the higher transportation costs is having a negative impact on production.

While the delta variant might not lead to another full economic shutdown, its current impacts on the economy are undeniable.

What about other factors impacting supply chain?

But the delta variant alone is not the only thing that is impacting supply chain.

Domestically, workforce shortages are also having an impact that is preventing supply chain to get back to pre-pandemic levels. According to National Association of Manufacturers CEO Jay Timmons via CNBC, there are 851,000 open jobs in manufacturing – a figure that is expected to increase to over 2 million by 2030.

Globally, last month’s floods in Europe and China have had devastating impacts. Specifically, the floods in China have slowed importation of coal, which is needed for factory production.

What can you do?

The delta variant, in addition to workforce shortages and last month's floods, serve as a reminder of how quickly the supply chain can change. It is important for companies to remain flexible because of this, and to have contingencies in place as the availability and price of raw materials ebbs and flows.

Some materials are better sourced in an RFP process. The best strategy for other products that are seeing rising prices that may soon again fall could be to search for the lowest price on the market. Turning to Corcentric to help create a strategy to source your needs will help combat the consequences of this tightening supply chain.






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Jonathan Heller

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