Dive Brief:

• The U.S. federal government is back up and running after a 35 day shutdown, but the impact on the supply chain might not be over.
• Government data, which the private sector relies on to understand what's happening in the broader economy, is delayed with the the Bureau of Economic Analysis (BEA) stating four reports scheduled for this week and next will be coming out later than expected.
• Air cargo carriers didn't report any major issues as a result of the shutdown, but cascading airline delays in the northeast toward the end of the shutdown pointed to potential problems had it continued.

Dive Insight:

The consequences of the government shutdown will be felt for months, impacting company operations, supplier performance and customer service. While the number of impacted federal employees and contractors numbered greater than 800,000, adding in employees impacted within the extended supply chain increase that amount considerably.

The full effect of supply chain disruptions are still to be identified, and supply chain managers should be prepared not only for supply constraints but for a bevy of business related issues that will play out in the week and months to come.

Orders for government goods and services were stopped, forcing some suppliers to shut down, impacting lateral commercial supply chains. Manufacturing companies that support both military and commercial clients may have gone on a reduced schedule or closed up all together when their contracts were stopped. Priority for military orders may impact delivery schedules once companies begin to ramp up.

Many governmental food inspection services were discontinued, causing breaks in the food supply chain along with potential safety issues. Constrained airport operations, including inspection and delays, created headaches with freight shipments. Retail inventories are out of kilter, as the impacted workers delayed holiday shopping and continue to conserve funds.

But while the shutdown is temporarily over, the worst may be yet to come. The backlogged work still has to get done and will take quite a while to clear, especially as new orders are entered. Employee morale is low and not everyone impacted will see back wages. Some are looking for new jobs, causing labor shortages just when companies need to ramp up.

Supply chain risk profiles typically do not consider protracted and politically driven government shutdowns, but perhaps they will going forward. The interdependencies of government and business have been exposed, creating a learning exercise for all. The supply chain will heal, but it may look different when it does.