Global material shortages have emerged as a grave concern in recent times, disrupting some of the most resilient economies, businesses, and supply chains. In recent years, the impact of global material shortages has become more pronounced due to the complex interaction of multiple factors. These contributing factors include rapid industrialization, globalization, and geopolitical fluctuations. Amidst such uncertainties, the COVID-19 pandemic further intensified the impact of global material shortages on supply chain management and businesses. For example, in 2021, the automotive industry incurred tangible losses of nearly $ 210 Billion, attributable to semiconductor shortages alone (Applied Energy Systems, 2023).
The imbalance in supply and demand dynamics plays a significant part in global material shortages. During the pandemic, for example, the price of steel increased by more than 200%, attributable to production slowdowns (Lambert, 2021). Inflated steel prices had direct implications for the construction sector, increasing costs or completion times. In the renewable energy sector, geopolitical tensions in the Crimean region have resulted in lithium shortages, a key component for electronic vehicle manufacturing.
Apart from geopolitical issues, state economic policies and alliances contribute to tangible material shortages. For example, China is a dominant player in rare earth materials to the extent that numerous global economies have become excessively reliant on a single supply source, raising concerns over the sustainability and stability of such a model (Nguyen & Onstad, 2023). The assertion here is to evaluate global material shortages beyond what appears on the surface alone and factor in the broader impact of such instances. For example, in 2021, Ford and General Motors faced steep challenges of semiconductor shortage. One component shortage led to the shutdown of their plants (Wayland, 2021).
To address global material shortages, it is important to adopt and adhere to a diversified approach and resilient supply chain within the context of increased globalization. It would also be prudent for public-private partnerships to invest in recycling technology and ensure excessive reliance on a single source or region for the procurement of key components or raw materials. The absence of such a proactive approach could result in economic disruptions and severe global recessions or crises.
