Supply Chain Shortages: Understanding the Pandemic’s Disruption into 2022

Supply Chain Shortages: Understanding the Pandemic’s Disruption into 2022

Supply Chain Shortages: Understanding the Pandemic’s Disruption into 2022 banner

Let’s take a crash course into one of the basic economic laws: supply and demand. A market is driven by supply and demand-supply referring to how much product is produced at a set price, and demand as how much consumers are willing to pay for the supplied product. When variables affect supply and demand unexpectedly, disruption occurs.

While the pandemic reshaped much of what our lives were, it’s also reshaped economies across the globe. Throughout history, global economies have ebbed and flowed through different supply chain disruptions, but COVID-19 initially launched many product shortages with domino effects seen today.

Let’s walk through how the pandemic disrupted and continues to reshape the supply chain in the United States.

When did the supply chain challenges start?

As COVID-19 spread to the United States in early 2020, businesses closed and stay-at-home orders were imposed. As a result, many industries were faced with major supply chain disruptions. As factories and storage facilities closed or reduced capacity, warehouse workers could not prepare, deliver, or process products — the beginning of the disruption.

If you ask anyone in the United States what product shortage they remember from 2020, you’ll hear in unison, “toilet paper.” Why? A combination of panic buying and supply chain disruption — a dramatic increase in demand could not meet the existing supply, coupled with factory and warehouse capacity reductions with stay-at-home orders.

Hand sanitizer, cleaning products, paper goods, lumber, among many others were in short supply in 2020 — some continuing today. All were driven by an unexpected increase in demand — some for safety, like hand sanitizer, cleaning sprays, and paper goods, and others for pleasure with more time at home, like lumber and building supplies to renovate living spaces.

Are there supply chain issues now?

Two years later, the U.S. economy continues to face many supply chain disruptions — more than toilet paper and hand sanitizer. You’ll see these products on the store shelves, but in limited supply — not pre-2020 stock levels.

Many variables are at play with the supply chain issues we face now — including workforce shortages, global relations, dramatic product price and delivery rate increases, among others.

What’s in short supply now?


We’re not talking about potato chips — although disruptions to food supply will continue into 2022. We’re talking about a shortage of semiconductor chips, a computer chip utilized in smartphones, automobiles, washing machines, and millions of other products.

Have you heard about the decline in new automobile production lately? That’s where the semiconductor chip shortage comes in. The supply for semiconductors cannot meet the existing demand. For the automobile industry, many companies continue to fall short of their production goals due to increased competition for the number of semiconductor chips needed to produce new vehicles. According to a September report by AlixPartners, semiconductor chip shortages could cost the auto industry $210 billion in revenue by the end of 2021. As new vehicle production declined, demand for used vehicles increased. Have you received a postcard from your local car dealership offering to purchase your vehicle at “all-time high prices?” Many car dealerships are unable to keep their used-vehicle stock to match the demand. A true example of a domino effect.

However, many other industries feel the negative impacts of this chip shortage. According to a Goldman Sachs analysis, 169 industries are impacted — from steel and concrete manufacturing to breweries.


When you visit your local grocery store, are you met with increasingly empty shelves? As omicron spread, it exacerbated existing supply chain challenges and labor shortages, causing reduced food availability.

In 2022, meat, produce, and packaged goods will be in short supply at the market. When you find these products, you’ll likely notice a steep price increase, too. According to the Labor Department, the consumer price index increased at the fastest pace since 1982, jumping 7% last year.

The food industry battles many challenges today — a continuing pandemic, product supply shortages, labor shortages (including service workers and truck drivers), winter weather, and rising prices — with significant potential impacts. As food prices continue to increase, without wages matching inflation and increased cost of living, and product remains slim, hunger in the U.S. could worsen.


In the early days of the pandemic, when many businesses closed temporarily or sent their employees to work remotely, a surge in home renovations and home buying emerged. The demand for raw materials, like lumber, vastly exceeded the demand — as many lumber mills were closed or reduced capacity due to the pandemic.

Contractors and renovation DIY-ers were met with empty lumber shelves and, to their surprise, steep price increases. In one year, between 2020 and 2021, the price of lumber increased more than 300%. Now, two years into the pandemic, lumber prices remain high and supply low.

This shortage not only impacts those looking to remodel or renovate a home — it has significant impacts to those looking to purchase a newly constructed home. In fact, according to the National Association of Home Builders, soaring lumber prices added $36,000 to the cost of a new single-family home.


“The Great Resignation” made its mark in 2021. Last July, 4 million Americans quit their jobs and open positions reached an all-time high, according to the U.S. Bureau of Labor Statistics. This year, resignations will continue, but experts predict the rate will slow.

Not only are businesses struggling to acquire and retain talent due to the Great Resignation, but new coronavirus variants, like omicron, are further shrinking the workforce. More employees are calling out sick, forcing businesses to close temporarily from a shortage of workers.

Other reasons for the labor shortage? The workforce has changed. The pandemic resulted in much reflection — globally, nationally, and individually. Many are evaluating their lives and prioritizing what’s important to them — their time, their passions, and their personal lives. Workers are expressing a need for increased wages, especially as inflation continues to rise. They want flexibility with remote work, where they can balance their work lives while spending more time with their families. Business leaders must understand the changing workforce and align their policies, processes, and culture to the changing workforce. Otherwise, they may see not only increased resignations but long-lasting and potentially devastating worker shortages.

Why are there supply chain issues?

Many factors are at play when it comes to supply chain shortages — ultimately, the supply cannot meet the demand. While the issues depend on the industry — the semiconductor chip shortage causes are not the same as the labor shortages — the pandemic caused, accelerated, or created a ripple effect leading to the shortages we see today.

When will supply chain issues resolve?

Unfortunately, it’s unclear when current supply chain disruptions will resolve and return to normalcy. However, it’s not all bad news — the Federal Reserve Bank of New York noted, “global supply chain pressures, while still historically high, have peaked and might start to moderate somewhat going forward,” according to the newly developed Global Supply Chain Pressure Index.

Much remains to be seen as we move into the two-year anniversary of the COVID-19 pandemic. We began with a shortage of toilet paper and cleaning products — now, we face impacts to automobiles, food products, apparel, and more.

Interested in learning more about operations and supply chain management?

Consider earning your degree with JWU College of Professional Studies. We offer an undergraduate bachelor of science in business administration (BSBA) and MBA in Operations and Supply Chain Management, as well as a micro-certificate for you to refine your skills and develop a career in the industry.

For more information about completing your degree, complete the Request Info form, call 855-JWU-1881, or email [email protected].

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