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VANCOUVER, British Columbia - ColoradoDesk -- At the beginning of the pandemic, the world was forced to adapt to a "new normal" in which in-person shopping was halted in favor of online retail to reduce the spread of COVID-19. As a result, brick-and-mortar stores suffered, and some even closed for a period of time in the early days of the pandemic. Retailers faced a difficult choice: go out of business or work tirelessly and rapidly to establish an online presence to maintain revenue streams. Due to the fragmented nature of supply chains, shortages ensued in the pandemic for medical equipment and supplies, consumer electronics and cars (due largely to a shortage in semiconductors), and lumber. This caused prices for these goods to skyrocket.
The pandemic has also, more generally, changed our shopping habits. Some smaller malls are shuttering, while larger malls are able to deal with the decline in foot traffic. Rather than going to a brick-and-mortar store and perusing the aisles, consumers may shop online via postal mail, or even buy online and pick up in-store. According to McKinsey, the typical pandemic shopper does most things, including shopping, virtually. They also stick to value shopping and buy less expensive products; and they've tried a new way of shopping, such as delivery or curbside pickup.
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While the long-term supply chain impacts of COVID-19, and now the resurgence of the more contagious Delta variant, remain unclear, one thing is for sure: the impacts are very real. Companies now find themselves in the difficult position of trying to stay profitable while managing and mitigating COVID-19 spread and adapting to the changes in consumer behavior. PWC writes that companies have faced difficulty gaining an "on-the-ground understanding" of volume changes relating to supply and demand.
PWC reports that companies affected by the pandemic now take different actions such as transporting inventory to areas away from quarantine zones; buying ahead to ensure that raw materials and inventory are available if a shortage happens later on down the line; shifting to air transportation to shorten transportation times; redesigning products when the raw materials are not available to make the old product; and maximizing near-term revenue by offering discounts on existing inventory.
What's more, leaky supply chains have translated to losses on Wall Street. Take, for example, Coca-Cola (KO). Immediately after the pandemic started, CEO James Quincey stated that the supply chain worldwide was 'creaking.' Fast forward to September 2021, and now a shortage of aluminum is making it difficult for the company to deliver its products. What's more, consumers report shortages in Diet Coke and Coke Zero. Before the pandemic, the stock reached a high of over $60, dropping to $38.30 on March 28, 2020. While the stock has made a gradual rebound and is now about $55.61 per share, persisting supply chain issues threaten the company's bottom line and ability to grow.
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In the United States, companies are taking actions to mitigate impacts such as these by boosting domestic production of products, reduce dependence on overseas sources which could be risky due to COVID-19 or other factors, and rethink inventory and replenishment strategies to be able to adapt to shortages and disruptions. These changes also occur in warehouses, where managers have implemented changes to keep employees safe via reduced occupancy restrictions, COVID-19 testing, and temperature checks, and so on.
Experts warn that the supply chain impacts of COVID-19 could last two more years due to closures of ports due to COVID-19 outbreaks; worker shortages; and a lack of supplies. Without raw materials, supply chain issues are bound to continue as supply remains scarce. How can investors make profitable trades in this environment? One way is to strategically buy stocks that are affected by supply chain issues, such as TSMC, the world's leading advanced chipmaker for high-tech electronics. Or consider other opportunities such as this list of stock picks based on the supply chain problems the world is currently experiencing. While the supply chain issues may persist for months, it's likely that they are calling attention to problems that will either resolve post-pandemic or that require new business processes. Only time can tell what the state of the global supply chains will be, say, a year from now.
The pandemic has also, more generally, changed our shopping habits. Some smaller malls are shuttering, while larger malls are able to deal with the decline in foot traffic. Rather than going to a brick-and-mortar store and perusing the aisles, consumers may shop online via postal mail, or even buy online and pick up in-store. According to McKinsey, the typical pandemic shopper does most things, including shopping, virtually. They also stick to value shopping and buy less expensive products; and they've tried a new way of shopping, such as delivery or curbside pickup.
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While the long-term supply chain impacts of COVID-19, and now the resurgence of the more contagious Delta variant, remain unclear, one thing is for sure: the impacts are very real. Companies now find themselves in the difficult position of trying to stay profitable while managing and mitigating COVID-19 spread and adapting to the changes in consumer behavior. PWC writes that companies have faced difficulty gaining an "on-the-ground understanding" of volume changes relating to supply and demand.
PWC reports that companies affected by the pandemic now take different actions such as transporting inventory to areas away from quarantine zones; buying ahead to ensure that raw materials and inventory are available if a shortage happens later on down the line; shifting to air transportation to shorten transportation times; redesigning products when the raw materials are not available to make the old product; and maximizing near-term revenue by offering discounts on existing inventory.
What's more, leaky supply chains have translated to losses on Wall Street. Take, for example, Coca-Cola (KO). Immediately after the pandemic started, CEO James Quincey stated that the supply chain worldwide was 'creaking.' Fast forward to September 2021, and now a shortage of aluminum is making it difficult for the company to deliver its products. What's more, consumers report shortages in Diet Coke and Coke Zero. Before the pandemic, the stock reached a high of over $60, dropping to $38.30 on March 28, 2020. While the stock has made a gradual rebound and is now about $55.61 per share, persisting supply chain issues threaten the company's bottom line and ability to grow.
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In the United States, companies are taking actions to mitigate impacts such as these by boosting domestic production of products, reduce dependence on overseas sources which could be risky due to COVID-19 or other factors, and rethink inventory and replenishment strategies to be able to adapt to shortages and disruptions. These changes also occur in warehouses, where managers have implemented changes to keep employees safe via reduced occupancy restrictions, COVID-19 testing, and temperature checks, and so on.
Experts warn that the supply chain impacts of COVID-19 could last two more years due to closures of ports due to COVID-19 outbreaks; worker shortages; and a lack of supplies. Without raw materials, supply chain issues are bound to continue as supply remains scarce. How can investors make profitable trades in this environment? One way is to strategically buy stocks that are affected by supply chain issues, such as TSMC, the world's leading advanced chipmaker for high-tech electronics. Or consider other opportunities such as this list of stock picks based on the supply chain problems the world is currently experiencing. While the supply chain issues may persist for months, it's likely that they are calling attention to problems that will either resolve post-pandemic or that require new business processes. Only time can tell what the state of the global supply chains will be, say, a year from now.
Source: Braeden Lichti
Filed Under: Business
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