Keep your fingers crossed–it looks like the Omicron wave has crested. New cases have plummeted in the last few weeks, states are cautiously (controversially?) lifting mask mandates, and new data tells us people in the US and Europe are increasingly willing to live with Covid-19 and dip their toes back into “normal” life.
How’s The Supply Chain Doing?
It was less than a month ago that 20 million people in China, many in the port cities of Shanghai and Shenzhen, faced another round of Omicron-induced lockdowns. And you won’t find a growing willingness to live with Covid-19 in America’s largest export market either, the Chinese government continues its “zero-tolerance” approach to the virus, often ordering lockdowns after discovering just a few cases.
But honestly, it could have been a lot worse. China is 85% vaccinated, and while some doubt the efficacy of Chinese vaccines against Omicron, we have not seen the large-scale shutdowns that defined the early stages of the pandemic, or the similarly disruptive Delta variant.
In fact, key manufacturing hubs that aren’t China, Vietnam for example, dealt with Omicron rather well. Even though it reported 26,000 new infections on Sunday, twice the peak during Delta, Covid-19 is working its way through a heavily vaccinated Vietnamese population. Given Omicron’s known status as a milder variant, experts don’t foresee shutdowns as a result.
Things back home are a little better too. The holidays are over, and there’s no more mad rush to buy gifts. And as cases continue to fall, people are beginning to eat out and travel again, shifting consumer spending from the stay-at-home goods we all splurged on in 2020, to trips, concerts, and restaurants. People are spending on people again, and this will give more relief to a weary supply chain. The warmer weather helps.
America Calls In Sick
While Omicron wasn’t as deadly as earlier variants, it was highly, highly contagious and drove record-breaking worker absenteeism back in mid-to-late January. Almost nine million people were home sick, triple the number from a month earlier.
And this is a reminder that people are a vital part of the supply chain. The goods are delivered, except there are no hands to get them to customers. 9000 Starbucks outlets modified their hours as a result. McDonald’s cut restaurant hours by 10%, and Macy’s decided to close two hours earlier, four days a week. Domino’s Pizza is giving their customers a $3 “tip” in the form of a coupon if they pick up their own order. Why? Worker shortages.
Also contributing to the shortage of helping hands is The Great Resignation, where 4.5 million Americans voluntarily quit their jobs in November, 2021. We will have to watch and see what happens to Federal and State unemployment policies in the near future as they will likely determine whether or not people head back to work in the service and restaurant industries.
The Two Known Unknowns
It wouldn’t be life without unknowns, and right now there are two huge question marks in the supply chain community.
The first is, unsurprisingly, China. As long as the government continues to take their hard line approach to the pandemic, the lockdowns will continue, however intermittently. Since we get so much of what we rely on to live our lives from China, that’s a huge “if” hanging over the head of the supply chain.
Inflation is in the news a lot these days, and it looks like that topic isn’t going anywhere. Anxiety is bad for business and nothing causes anxiety like rising prices.
Visibility Is Vital
2022 might be a better year all around than 2021, but it will bring with it a new set of challenges. The pandemic’s not entirely over, people are worried about rising prices, China is unpredictable, and then there’s the whole threat of war between energy powerhouses Russia and Ukraine.
To counter our two unknowns, we’ll offer two pieces of advice you can use today to help buffer your supply chain against Omicron or any other disruption.
- Invest in visibility. Strains on the supply chain are here for a while, the causes just might change. First rate market intelligence and unparalleled visibility into the availability and volatility of key commodities will be invaluable for your strategy going forward. .
- Check in on people. It’s been a tough two years and there’s a good chance your colleagues, coworkers, and suppliers are feeling it. Make sure they’re OK and have what they need to thrive during these continuing uncertain times.
That’s it for our update on Omicron. Hopefully the next time we check in on it there are more positive signs to report.