A chain is only as strong as its weakest link. And when it comes to the current state of supply chains, “weakness is evident everywhere,” says Per Hong, partner with Kearney.

Prior to Omicron, there had been signs that some supply chain bottlenecks were beginning to clear up. But the new variant has presented global supply chains with yet another test of resilience.

The problems with ocean shipping, including soaring freight rates and tight capacity, are likely to persist into 2023. Much depends on the Chinese government, which as of the new year had placed thousands of citizens under quarantine due to the Omicron outbreak. Further, they are discouraging travel during the lunar new year break in February, when millions of Chinese travel home to celebrate with family.

Hong believes the pandemic will trigger some permanent changes in the design and execution of global supply chains, including a greater reliance on buffer stock and a shift in sourcing patterns away from China. We would add that reshoring manufacturing to the US will become a new, more permanent feature of our supply chain.

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