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THE SHORTAGE ECONOMY AND ITS IMPLICATIONS FOR SUPPLY CHAIN AND OPERATIONS MANAGEMENT
ABSTRACT
Supply chain (SC) and operations management has been developed for decades under the fundamental assumption of continuous availability (with some temporary fluctuations and disruptions) of resources to satisfy demand. Under extreme shocks and long-lasting disruptions, SCs and operations face long-term shortages of components, energy, capital, and labour, as well as rapidly rising prices. These long-term resource shortages and risks of hyper-inflation pose novel and unexpected challenges potentially leading to global ripple effects. In this conceptual paper, we first analyse and categorise the available literature on SC and operations management with resource shortages. We then systemise some managerial implications of resource shortages and rising inflation, conceptualising some potential research directions which appeared or may appear in the settings of shortage economy. We conclude that the shortage economy provides a distinct and specific context which goes beyond the conventional problems under constrained or disrupted resources – i.e. the long-term resource shortages with simultaneous disruptions in labour, material, energy, and capital availability. This paper could be useful for researchers and practitioners alike to systemise potential impacts of a shortage economy on SCs and operations, and to navigate adaptation and recovery processes in a structured way to help society cope with deep uncertainties.
KEYWORDS
Supply chain resilience; ripple effect; viability; COVID-19 pandemic; inflation; semiconductor shortage