Shipping containers at the port of Newark, N.J., Dec. 17.
Photo:
Victor J. Blue/Bloomberg News
Explaining the supply-chain crisis is like a blind man describing an elephant. It depends on where you grope. Drawing conclusions from a single point of contact can be misleading.
“An Insider Explains The Supply-Chain Crisis” by Tunku Varadarajan (Weekend Interview, Dec. 18) makes the reasonable point that shifts in consumer behavior contribute to the crisis. But demand for new ovens or toilet paper isn’t changing only because of the crisis. While timing and mix of demand will vary, the pandemic-related delays are caused by how disruptions affect the internal workings of the supply chain. The tanker stuck in the Suez Canal had a more consequential effect than the 4% shift of demand to services. Companies’ response to the crisis determine its duration and severity.
Any break in a link connecting two nodes in the network causes up-stream and downstream disruptions. Supply chains are overwhelmed by failures due to the most far-reaching disruption we have ever seen. These cause the delays and shortages. Demand shifts contribute to the chaos, but are far down in the list of causes.
Em.
Prof. Morris A. Cohen
University of Pennsylvania-Wharton
Philadelphia
The article explains that forecasters “can’t find the patterns” and that “there are no lessons from history.” But forecasters and economists have changed rapidly since the beginning of the pandemic; we now use much more short-term historical data and new predictive analytics tools, such as neural-network analysis, to create accurate short-term forecasts.
These forecasts may not reflect what firms would like to hear. But in 40 years of helping firms forecast supply-chain problems, I have never had the abundance of data and the powerful and predictive tools that we employ now. Both have mitigated the recent supply-chain problems.
Prof. Barry Keating
University of Notre Dame
Notre Dame, Ind.
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