More than two years into the pandemic, society appears to be returning to normal in most cases. Most restaurants are back in full swing and at full capacity, schools are in session with in-person classes and most mask mandates have lifted. Still, the global supply chain continues to bear the weight of COVID 19’s lasting impacts.
Businesses across the U.S. are managing low inventory, halted projects, price increases and, in some cases, angry consumers. Experts are calling this the Great Supply Chain Disruption. In 2020, the pandemic forced many businesses to lean out, close factories and layoff workers. In turn, this caused fewer goods to be produced.
Where it became more complicated was the underestimation of demand. From April to June 2020, for example, Amazon sold 57 percent more items than it had a year earlier. U.S. ports were flooded with too many ships, and there weren’t enough shipping containers to go around. Once the cargo containers actually got into ports and docked, there weren’t enough truck drivers to take them to warehouses due to the massive pandemic layoffs.
A survey conducted this year by New York-based consulting firm AlixPartners reports that 57 percent of 3,000 chief executives who were interviewed are worried that their company is not adapting fast enough to stay ahead of the supply chain disruption. Meanwhile, a recent New York Times report suggests a solution will require new technology, investments and a reinvention of the wheel.
Local Concerns
It’s tough to hear that companies nationally are struggling. It’s also difficult to see the negative impact here in Frisco, where some businesses have struggled with the effects of the Great Supply Chain Disruption.
Scott Rose, CEO of Collin County Construction, is battling increased shipping prices, projects that have been halted and a scarcity of equipment. He says the trouble for his company started nearly two years ago. “Prices had been increasing and it was frustrating, but we were handling it. … But by the end of 2020, we started seeing backed-up supply issues.”
In business since 2007, Collin County Construction ran into problems when banks began to reject financing on many of its clients’ projects. “We had clients who wanted to build restaurants and the banks were scared about taking on that risk,” Rose says. “No one knew how long the federal and state (COVID-related) regulations were going to last, so why bother financing a service like a hotel, restaurant or movie theater?”
With projects put on hold, many construction suppliers started to offload material as fast as they could to other states in an attempt to turn a profit. However, that meant when public spaces began opening back up, there wasn’t much building material to be had.
“It’s especially difficult to sit down with clients and try to explain that the price for a project they estimated with their bank back in 2019 isn’t even close to accurate anymore,” Rose says. “It’s really frustrating as a general contractor explaining the costs of things when they seem outrageous because people still have a pre-COVID mindset.”
To pivot, Rose says his company has been focusing on recession-proof construction projects such as multi-family homes, sports facilities and retirement communities. “You’ve got all kinds of things that increase when the economy gets bad,” he says. “So, we’re focused on those right now.”
Hat Trick
Tumbleweed TexStyles co-owner Jeb Matulich is feeling the sting of supply chain issues in three ways.
The hats that his company sells, which are made overseas, became backed up for months in 2020. Matulich says there was a rumor floating around at one point that there were millions of hats stuck on cargo ships. “Before, we had a relationship with a factory where we got our styles from,” he says. “We were getting a quick five-to-six week turnaround, but that all came to a halt when all the factories started closing.”
The second problem was that shipping costs increased by 30 to 40 percent. “We’ve had to up our prices a little bit, in part because of general inflation and in part because the supply chain issues,” Matulich explains.
Because fashion is a seasonal, fast-paced industry, it is more important than ever for Matulich and his team to plan ahead. “We’re thinking right now, ‘What do we need for the fall and winter?’ so we can order (items) now to get them in time,” he says. “It’s actually something that might be good for us anyway to get into the habit of doing because we work with so many retailers.”
Food Fight
The food industry has been putting up a good fight against supply chain problems, although most restaurants are seeing a shortage of essential supplies and ingredients.
Mary Mathis Sanchez, better known as the Frisco Snow Cone Lady, has been in business for 40 years. She thought quickly on her feet in March of this year about potential supply chain issues that her business might experience this summer.
“I got so worried hearing about everything going on and was afraid shipping prices were going to go up, so I ordered a lot of my supplies in bulk ahead of time,” Sanchez says. “I just made it by the grace of God and got all my (snow cone) syrups and plastic items like spoons and straws.”
Then came the item that many Frisco restaurants are fretting over: cups. “Styrofoam cups are like pulling teeth to get,” Sanchez says. “I’ve been collecting them – I have cups in the stand, boxes of them in my living room (at her home), in the spare bedroom and in my kitchen.”
Sanchez says she has spies out everywhere searching for and collecting cups to use at her business. “A lot of places I’ve gone to, like drive-thrus, either won’t have buns, cups or even chicken,” she says. “It’s been terribly hard for everyone.”
Chain restaurants may have a bit of an upper hand on the problem because of the of support system they have between locations. For example, while Chick-fil-A has certainly seen its share of struggles over the past few years, the chain’s locations help each other when needed.
“The great thing about having so many stores around us is that we can call on each other to borrow things,” says Frisco Chick-fil-A franchise owner and operator Frieda Marroquin. “If we’re out of lids at one location, we can borrow some from another.”
Chick-fil-A Executive Franchise Director Joel Upton says that stores increased the amount of stock kept in the restaurant at one time.
“COVID was the mother of all bullwhip effects,” he says. “Anything involving plastics were suddenly really hard to get. So now we’re holding more than we want to, but that’s what we have to do right now.”
Unlike some other local businesses dealing with consumer backlash and impatience, Marroquin says that thanks to the Chick-fil-A support center – which assists customers with orders, provides menu updates and answers frequently asked questions – communication through the restaurant’s app has been seamless.
When a product is out of stock, for example, the support center updates the Chick-fil-A app so that customers can know ahead of time that is the case. “They’ve been great at telling our customers what’s going on and off the menu,” Marroquin says.
Mallory Arnold is a freelance writer who enjoys long walks, crime podcasts and hanging out with her cat Ariana Grande.
