Paradoxes and mysteries in virus-infected supply chains: Hidden bottlenecks, changing consumer behaviors, and other non-usual suspects

In the early onset of the COVID-19 pandemic in the U.S., consumers experienced surprising shortages of essential goods such as toilet paper, yeast and flour, and some of their favorite meat cuts that appeared to be unrelated to the pandemic at first look. The “usual” explanations attributing these shortages to “demand spikes” (e.g., foreign suppliers, trade wars and tariffs, and “hoarding behavior” of panicked consumers) often failed to explain them, and in the best of cases, predicted only temporary shortages. However, shortages in these supply chains ended up being in many cases real “supply chain struggles,” with their true causes going beyond the “usual” ones, and revealing a set of deeper and “unusual causes.” Our detailed analysis of the affected supply chains identifies these overlooked failure factors and hidden causes. Our underestimated causes include demand shifts among market segments, siloed demand planning, bottlenecks in shared resources such as transportation and distribution, and supply chain structures driven by the economics of an efficiency era that failed in a risk-fraught environment. We conclude on the profound lessons learned from the pandemic crisis on supply chains, and the implied challenges to address for building resilient supply chains for the future. The resilient supply chains of the future require rethinking the relevant “systems” we plan and optimize (e.g., firm, industry, region, global factor resources, etc.). The usual answer of building firm-specific redundancy of assets and operational flexibility might be prohibitive in the level of investment required for any one firm, or their financial stakeholders, to pursue and accept.