The effects of the COVID-19 virus on supply chain operations were immediately and clearly evident to consumers who struggled to find fresh meat, disinfectant wipes, and toilet paper during 2020. Although many of those critical shortages have been resolved, the long-term implications for global supply chains continue to emerge, leaving lasting and detrimental impacts throughout global markets.
Take shoes as an example. In Vietnam, which is the world’s second largest supplier of shoes, the initial pandemic wave was relatively well-contained. But the Delta variant wreaked terrible havoc, arguably because the relatively poor country lacked sufficient vaccines to inoculate its population. During the summer months of 2021, an estimated 766,000 Vietnamese people caught the coronavirus, and more than 19,000 of them died. To contain the spread, Vietnam’s government imposed strict lockdowns. The factories that supply global clothing and shoe companies thus have shut down for extended periods.
The bottleneck means that many consumer brands, such as Nike, Everlane, and Old Navy, are preparing for four to six week delays in deliveries of their existing orders—a delay that threatens their ability to meet demand during the holiday season. Some firms that had moved their supply operations away from China and into Vietnam, whether as an ethical stance or in response to heightened tariffs placed on goods coming from China, now are considering moving back.
But even considering the potential loss of revenue for companies and the inconvenience of Western consumers facing low stock levels, the real threat involves other, less privileged actors in global supply chains. Low-wage workers in Vietnam, after months of shuttered factories, lack the most basic necessities. They already earned a poverty wage; without even that income, they are at great risk.
Furthermore, when it comes to products like shoes, some end-consumers express needs, not just wants. For example, the nonprofit group the Haitian American Caucus solicits donations of used shoes from U.S. consumers. It ships those shoes to the underdeveloped island nation and provides them to low income women, who then sell them to earn income for their families. But it has been receiving far fewer shoes than it needs to supply the people who depend on this resource, because U.S. consumers do not have options for replacing their existing footwear. In addition, suppliers that once might have donated overruns or previous seasons’ styles are now keeping those products to sell in their conventional channels.
These sorts of challenges and struggles clearly are not limited to the global shoe supply chain. But this example reveals just how pervasive the implications of the COVID-19 have been, and will continue to be, for nearly every member of every supply chain, all the world over.
Discussion Question:
- What solutions or alternatives are available to global brands whose supply chains are disrupted for such extended periods?
Source: Sapna Maheshwari and Patricia Cohen, “Retailers’ Latest Headache: Shutdowns at their Vietnamese Suppliers,” The New York Times, September 29, 2021; Peter S. Goodman, “Global Supply Shortages Reach All the Way to a Haitian Aid Group,” The New York Times, September 23, 2021