EXPLAINER

How supply chains break and why we're seeing shortages

Supermarket shelves are beginning to empty across the country as the Omicron variant strikes. Picture: Getty Images
Supermarket shelves are beginning to empty across the country as the Omicron variant strikes. Picture: Getty Images

Staff shortages across the economy are causing empty shelves. Stocks of everything from chicken burgers to toilet paper are running low to empty. Staff in crucial links in the supply chain - from abattoirs to trucks to checkouts - are having to stay home because of contact with infected people, or because they have been infected themselves.

We are learning the hard way that the supply chain is fragile.

How does it work?

Nearly two years ago, there was a crisis: some tea bags didn't have tags.

The company, Madura, apologised: "Dear Customer, With the current global upheaval we have been short supplied tags for our teabags, a matter outside our control."

It turned out that the supply chain was so exact that the weakest link broke it, and the weakest link was the Spanish supplier of bags and tags whose workers were ravaged by COVID. The bags normally came from Spain in batches of 70 million. The string attached to the tags and the tissue paper went from Germany to Spain - where the link was broken. It shows how fragile supply chains are. Companies keep barely minimal stock. Goods in the warehouse at the back of the store cost the store money.

But chicken zingers?

Signs appeared in Kentucky Fried Chicken stores: "Due to supplier issues, we have no original chicken, zingers, fillets or wings."

KFC put out a statement: "Our supply chain and workforce has been impacted by COVID-19. Rest assured we're doing all we can to get back to fryin' everyone's faves as soon as possible."

It's not only KFC which had difficulties "fryin' everyone's faves". Other fast food places and supermarkets have also had shortages of products made from chicken.

"There are plenty of chickens out on farms, but just not enough people to pick them up, process them and distribute chicken products to stores," Dr Vivien Kite, director of the Australian Chicken Meat Federation, said.

In the case of chicken, the breaks in the chain are multiple. There aren't enough staff at the processing end. There is also a shortage of drivers.

Any help on the way?

Rules could be - and are being - relaxed so fewer workers would have to stay isolated at home if they were near infected people.

"The exemptions created in NSW and Queensland over the past few days, which allow critical workers in our supply chain, who are close contacts but negative and asymptomatic, to return to work may go some way to alleviating the current chicken supply situation," Dr Kite said. The chicken processing industry also wants its businesses to get priority from governments in getting rapid tests.

What is to be done?

The government wants workers who have been in contact with infected people for less than four hours to be allowed to keep working when they are in crucial jobs, particularly moving goods.

There is a downside. "Employers will use this change to pressure exposed and even sick workers to return to work, risking their own health, colleagues, customers, and inevitably spreading the virus further," Professor Jim Stanford of Sydney University said.

"Australians certainly want supply chains to keep moving. That won't happen by simply pretending someone with three hours and 59 minutes of face-to-face indoor contact with Omicron is safe. Putting asymptomatic but exposed and potentially infected people back to work will only accelerate the spread."

Another expert said that the answer is to address demand as well as supply, and that meant people holding off from panic buying.

"Don't buy more than you need. Just slow down. Just buy enough for what you need for the week," Dr Vinh Thai, an expert on supply chains at RMIT University, said.

At the end of it all, crises in the supply chain will pass when the pandemic passes. But in normal times, tight supply chains are good business. They minimise costs, until things go wrong.

This story How supply chains break and why we're seeing shortages first appeared on Illawarra Mercury.