ROCHESTER, N.Y. (WROC) — When it comes to products like meat, hand sanitizer, even gasoline, the supply chain is vital when it comes to pricing and our ability to find them during the COVID-19 pandemic.
Dr. Steven Carnovale is an Assistant Professor of Supply Chain Management at the Rochester Institute of Technology. He explained how the supply chain works and how COVID-19 is impacting it Tuesday during News 8 at Noon.
“A supply chain, in general, is all the set of processes going from raw material delivered to the final product,” said Dr. Carnovale. “So you can take any product you want, everything that goes into manufacturing, sourcing, planning, storing, and then ultimately delivering and then getting that out to a consumer or a business. So the impact that we’re seeing right now on that set of processes – it’s quite a bit, as a matter of fact. A great example is the food supply chain. Right now, when we look around, we see livestock manufacturers or slaughterhouses and things like that, there are reports coming from around the country that these particular facilities are going offline because of the COVID-19 impact on workers there, and so it’s almost a bottleneck to the agricultural and meat supply chain.”
Dr. Carnovale said the supply chain is driven by the way that people respond in terms of their purchasing behavior during a crisis. “You can generalize all of this into what we call the bullwhip effect and it’s really easy to visualize. If you take a bullwhip and you crack it, in the beginning you’re going to see some small little ripples that will happen, but then as it goes out toward the end you see a huge magnified increase. What ends up happening is when we go to the retail store and we buy everything we can the demand increases and – of course – the retailer is going to go back to the wholesaler and say we need more – and the wholesaler goes back to the manufacturer. And then you’ve got to think of all of these different retailers doing the exact same thing. It really multiplies the effect as it goes upstream in the supply chain.”
As to when the supply chain might return to normal, Dr. Carnovale wouldn’t commit to a specific time. “I’d be remiss if I were to give a date with anything, but I think what you’re seeing is that there’s a very strong resilience in the agricultural and the consumer goods supply chain and that if policies were put into place to mitigate these risks then this should be a hiccup rather than an extended price hike. I think we should strap in and continue to get ready for what might be a bit of a chaotic summer.”