The impact of sequestration on US supply chains

An article in Bloombergbusinessweek (March 11, 2013) describes the impact of the US government sequester on food and transport. Food inspector cutbacks means that meat, poultry and egg processors may have to cut back operations as the inspectors are required for operation. The projected impact is lower production and $10 billion in losses, with worker layoffs projected to have $400 million in wage cuts. Delays in processing imports due to lack of sufficient government customs inspectors or other are estimated to be modest at first, but grow rapidly as queues build up and utilization increases. How should individual supply chains compensate – should companies start boosting inventories to hedge against these delays, and, if so, will these orders increase congestion ? Will the import delays increase spending within the US and thus boost local production ? Will prices rise for items affected by the cuts and thus soften demand and resolve the mismatches in supply and demand ?

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About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues and tagged , , , , , , , , , . Bookmark the permalink.

One Response to The impact of sequestration on US supply chains

  1. Tom W. says:

    Not sure on the impacts listed above, but as Lee said when Stonewall Jackson was shot and lost his left arm – “Jackson has lost his left arm and I have lost my right.” Definitely a significant impact in the days ahead as we look to manage the gap in GS tasks with Military (sometimes less experience) and Contractors(less authority). Fortunately we are planning to minimize the impact on capability.

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