Posted on March 11, 2021 @ 07:47:00 AM by Paul Meagher
I recently went to a local appliance store to inquire about their fridges. They mostly carry General Electric appliances. When I arrived I was quite surprised to see that they had hardly any inventory. I was informed that the limited inventory I could see was already spoken for. I asked about getting a fridge and was told I could be waiting 4 months for delivery.
It is likely that there will be supply chain issues for common types of lumber from 2 x 4's, plywood, and decking especially as we emerge from the pandemic and the season for building/renovation/diy projects starts to heat up.
From the point of view of the end consumer, these supply chain issues are major frustrations both in terms of not being able to get a product you want/need or having to pay higher amounts because of scarcity. From the point of view of an entrepreneur, these disruptions signal an unmet demand and an opportunity to provide some type of supply chain solution. Where the news media might use the term "disruption" an entrepreneur might substitute the word "opportunity".
We encountered supply chain issues in the early days of the pandemic when there was a lack of Personal Protective Equipment (PPE). There was a huge demand that was not being met and this was a signal for many different companies to step forward to help meet the demand. The shift to working and spending more time at home has spawned increased demand for many products and is causing ongoing supply chain issues. The shortage in GE Appliances, for example, is being attributed in part to increased home renovations and replacement of appliances.
As we exit the pandemic there are likely to be supply chain issues if the economy starts to heat up and there is not enough supply to meet demand. An entrepreneur or investor looking for opportunities might want to research these disruptions, their causes, and the possible solutions to identity potential opportunities. Maybe it involves manufacturing items that are typically manufactured elsewhere, or obtaining needed items from other sources, or solving a logistics issue, or creating software that sources/monitors supply chain items, or anticipating demand and obtaining items that will be in demand later. An example of the later is some automotive companies that anticipated potential supply chain issues with computer chips and stockpiled them. They are now sitting pretty compared to other automotive manufacturers who did not anticipate shortages and can't roll out new vehicles until they can obtain a supply of computer chips.
I'm also seeing supply chain issues in ordering fruit trees, berry plants, and vegetable seeds. The primary producers are running out of stock on the most desirable items. It will also be interesting to monitor the types of foods that might be in short supply. There was a run of on flour last year when everyone started baking at home. As we emerge from the pandemic what food supply chain issues might we see?
Where I live residential real estate has been hot with house prices going up, houses not staying on the market very long, and in some cases bidding wars leading to closing prices above the asking price. There doesn't seem to be enough real estate supply to meet demand.
This may be the biggest supply chain issue of them all especially considering the quickly rising cost of standard building materials that make purchasing an existing home even more attractive. Opportunities abound for entrepreneurs and investors in the residential real estate supply chain.
In conclusion, supply chain disruptions are frustrating for the companies trying to manufacturer products and for the end consumer. They also signal opportunities for those who seek to understand the causes and the possible solutions that might appeal to the manufacturers (B2B) and consumers (B2C). Many people are unaware of the supply chains and what it takes to keep them running smoothly. When they are disrupted we start to see under the hood that they involve numerous physical and computational steps that can potentially be disrupted. We have become more aware of supply chains as a result of pandemic shortages but there is still much to learn if you want to understand where entrepreneurial and investment opportunities might lie.