Aside from hearing about some of the cool companies I get to visit, my children normally are not interested in anything business-related. That’s changed in the last few weeks as some of their favorite products have not been available at stores, and they want to know why.
Now, finding the right multipack of goldfish-shaped crackers isn’t the same as not being able to find a microchip needed to make a car run, but both are caused by the twin scourges of supply chain bottlenecks and workforce shortages. It seemed to be the ideal time to give them a lesson in basic economics beyond just supply and demand.
To make the box of crackers, a manufacturer needs all the ingredients that go into each cracker but also the packaging material for both the individual bags and the box they’re packaged in. Since the pandemic began, demand for paper products, including the cardboard box the crackers are shipped in, has increased, making it more difficult and expensive for businesses to find the supplies they need. Barges carrying supplies from overseas, such as microchips, are waiting at sea for their turn to unload at the country’s ports. (The backup, like so many other issues, has its roots in the pandemic.)
Once a manufacturer has all the supplies it needs to make its products, the next challenge is getting them to consumers. Supply chain problems again play a role, as there are not enough truck drivers to get products from the ports to their destination, whether it’s a retailer or another manufacturer that needs them for a finished product.
This is where the worker shortage enters the picture. In addition to not having enough truck drivers, manufacturers may not be able to increase production since they don’t have enough workers.
My kids have seen the help wanted signs everywhere, so they understand there are not enough workers. The next question, of course, was where are all the workers? That answer is more complex, but I pointed to demographics, adding there were a lot more baby boomers than Gen Xers and millennials, and as they retire, there are not enough people to replace them in the workforce. I know there are many other reasons, but I was going for simple.
As Christmas and other holidays approach, I read that gifts and other items may not be available due to the clogs in the supply chain. It’s possible that retailers want consumers to begin shopping early, but if Christmas approaches and gifts aren’t showing up under trees, more parents will need to have discussions about supply chains with their kids, but insert the word “elves” for workers.
It was a lengthy explanation to what they thought was a simple question, but it also provided an opportunity to discuss economics and how that box of crackers was just one small part of a larger puzzle businesses are desperately trying to solve.
