Here’s how supply chain disruptions are impacting Phoenix businesses

Business News | 22 Oct, 2021 |

Having a hard time getting a drink to-go? You can blame the supply chain. Nationwide supply chain disruption is driving up prices and driving out products in downtown Phoenix.

When the COVID-19 pandemic began, the supply chain shifted in an unusual way, Eddie Davila, Arizona State University principal lecturer and assistant chair of supply chain management, said. Prices crept up and businesses began having difficulty securing products.

Price increases can be traced back to transportation. Last August, Davila said it cost about $2,000 to get a 40-foot container from China to the United States. In August, the cost was around $10,000. That’s a 500% increase from last year.

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Davila said any company would be losing money at those prices. However, a larger company with greater buying power, like Amazon, might have an easier time overcoming this loss than a smaller business, Davila said.

“[If I’m a local business owner] I don’t have the buying power, potentially, to get access to the small amount of inventory that may be out there,” Davila said. “And if I do want access to inventory, they may have a shortage.”

Aaron Schofield owns Luana’s Coffee and Beer, a cafe located inside a converted home in downtown Phoenix. Schofield ran Luana’s mobile coffee cart before opening a brick-and-mortar location in January 2020. When COVID-19 began in March 2020, he had to get creative with his business approaches.

“We spray painted a drive through in our parking lot behind our building … and we put a doorbell on a newspaper stand in our parking lot,” Schofield said. “The funny part was, I worked so hard to get a brick-and-mortar location only to be handicapped and go through COVID the first year.”

Schofield said he had a “leg up” on the industry because of the mobile coffee cart, which he believes saved his company. But after making it through COVID-19, he said Luana’s began seeing the impacts of the supply chain disruption.

“The biggest mishap for us that we’ve dealt with as far as supply chain issues were our cups,” Schofield said. “Throughout the entire industry of the restaurant industry, to-go cups disappeared for a while.”

Normally, Schofield said he’d ask customers to bring their own cups. Concerned about COVID-19 safety, he didn’t feel comfortable doing so.

“When we were really short on cups and we finally found cups … they were trying to charge us three times the amount for a box of cups than we would normally pay,” Schofield said. “It’s not something that we, as a business coming out of a pandemic, can take on at this point.”

Tristan Davies, the owner of Fillmore Coffee Co. in downtown Phoenix, has also been experiencing supply chain disruptions. Davies said Fillmore’s shipments, which typically occur twice a week, have been inconsistent.

“Half the time, they don’t have a driver to drive the trucks,” Davies said. “We’re waiting on products and stuff, so that’s been pretty frustrating. But then, even the products themselves, they’re out of a lot of stuff because they can’t get things from their suppliers.”

The labor shortage Davies has observed is another place where issues can arise. Because supply is a chain, disruption in one element trickles down to other aspects, causing a compounding problem.

“A supply chain is a chain, and a chain is only as strong as its weakest link,” Davila said. “Some days right now, your weakest link is your supplier. Sometimes the weakest link is their supplier.”

Regardless of the cause, a disruption in the chain affects both businesses and customers. Right now, because transportation costs are up, prices of goods and services are surging as well.

“There could be certain items that you’re used to getting, you may not be able to get them,” Davila said.

Davies has experienced this firsthand. He said he was unable to serve some menu items a few days ago because a driver wasn’t available to deliver his shipment until later that day.

“It just complicates a lot of things, it doesn’t flow like it usually would, which is frustrating,” Davies said.

As the world becomes increasingly global, supply chain disruptions are more likely to occur, Davila said, so there’s no way to predict when these issues might end. In these tumultuous times, Phoenix local businesses have joined hands to ensure nobody is without support.

“We take care of each other as much as possible, in that we share things if we can,” Schofield said. “The restaurant industry really has been together to make sure that each person’s concept is not standing alone.”

When Schofield found cups, he bought some for his friends’ restaurants. A couple days later, they brought him some pizza boxes. Acts like these unite the community in times of crisis.

“I think that there’s some beauty to all that chaos,” Schofield said.

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