In the year 2020, we endured a worldwide pandemic, local lockdowns, and the 麻豆精品 S淕reat Toilet Paper Shortage. 麻豆精品 S� The latter foreshadowed an ongoing sequence of shortages: lumber, refrigerators, meat, cars, and most recently, artificial Christmas trees.
麻豆精品 S淗istory is being made before our eyes, 麻豆精品 S� says Muge Yayla-Kullu, associate professor of supply-chain management at UCF. 麻豆精品 S淲hat we 麻豆精品 S檙e experiencing is the result of an avalanche of problems. 麻豆精品 S�
In lead-up to holiday shopping, we 麻豆精品 S檙e sitting in the middle of an unprecedented lesson in basic economics. Demand is high and supply is low, or more specifically, it 麻豆精品 S檚 stuck in factories, ports, and warehouses. The U.S. Department of Labor recently reported that the warehouse industry has a record 490,000 job openings. The American Trucking Association says it 麻豆精品 S檚 short 80,000 drivers, which spells trouble when you consider that trucks transport 72% of our freight. Some trucking companies are offering $15,000 bonuses to recruit drivers.
麻豆精品 S淲e 麻豆精品 S檙e accustomed to dealing with limited supplies of certain products this time of year, like PlayStations or certain toys, 麻豆精品 S� says UCF Associate Professor of Marketing Axel Stock, who 麻豆精品 S檚 researched product scarcity for 20 years. 麻豆精品 S淏usinesses will create scarcity as a strategy to drive up demand, which allows them to increase prices. The scarcity today is different. It 麻豆精品 S檚 due to external reasons, but for consumers the result is the same. 麻豆精品 S�
Higher prices. Fewer choices. Tests of patience. Stock and Yayla-Kullu emphasize these words: Do not panic. Please.
麻豆精品 S淧anic buying only make things worse, 麻豆精品 S� says Yayla-Kullu. 麻豆精品 S淲e 麻豆精品 S檝e seen enough mistakes already. 麻豆精品 S�
What exactly is going on?
Yayla-Kullu has been teaching about possible crises in the global supply chain every semester for the past 18 years, and prior to that she worked in business and banking.
Yayla-Kullu merged her business experience with a passion for researching supply-chain operations, and now shares her findings with UCF students who will become the next global business leaders. She stresses the need for companies to invest in operational hedging, where a team envisions worst-case scenarios and prepares for disruptions in the supply chain 麻豆精品 S� fires, labor strikes, ships stuck in the Suez Canal. In December 2019, she could sense we were on the cusp of a new lesson.
麻豆精品 S淲hen manufacturing stopped in Asia because of COVID-19, I told my students to think a year, two years, five years ahead, 麻豆精品 S� she says. 麻豆精品 S淎 major logistics problem is coming. Production will slow. Demand will slow. But then demand will go back up quickly, and the supply of products will be out of balance. Yes, the pandemic is once in a lifetime, but more business leaders should have forecasted the bottlenecks that we 麻豆精品 S檙e seeing. 麻豆精品 S�
Stock had his suspicions in June, just as businesses in the U.S. seemed to be getting back on track. A month after ordering a new soccer uniform for his 9-year-old son, the team had to take the field in sponsorless jerseys. The new uniforms still hadn 麻豆精品 S檛 arrived by early November.
麻豆精品 S淢uch of my research is an outgrowth from personal experiences, 麻豆精品 S� says Stock. 麻豆精品 S淲hen we ordered our unforms, people all over the world were ordering products. The countries where most manufacturing takes place were dealing with vaccine shortages and occasional closures. The facilities were overwhelmed. Then everything shipped at the same time. Ports backed up and there weren 麻豆精品 S檛 enough workers, but people are spending. 麻豆精品 S�
Computer chips are good examples. They 麻豆精品 S檙e the brains in some of the most wished-for holiday presents: laptops. Phones. TVs. Cars.
麻豆精品 S淚f a car is made with 30,000 small parts, but one computer chip is unavailable 麻豆精品 S� you can 麻豆精品 S檛 finish the car, 麻豆精品 S� says Yayla-Kullu. The same goes for kitchen appliances and video games. She urges for a second time: 麻豆精品 S淒on 麻豆精品 S檛 panic. 麻豆精品 S�
And Stock reassures things aren 麻豆精品 S檛 as bad as they might seem.
麻豆精品 S淲e always come up with solutions to problems, 麻豆精品 S� he says.
What should we do?
At the start of the pandemic, Yayla-Kullu saw what Floridians see during a hurricane threat 麻豆精品 S� empty shelves.
麻豆精品 S淚 begged people not to buy too much toilet paper or disinfectant. It 麻豆精品 S檚 the same now with pumpkin-pie filling, 麻豆精品 S� Yayla-Kullu says. 麻豆精品 S淛ust buy one of whatever you need, and we 麻豆精品 S檒l get back to normal faster. 麻豆精品 S�
Overbuying, as she tells students, causes 麻豆精品 S渢he bullwhip effect. 麻豆精品 S� A retailer plans to sell one box of stuffing to each customer. Instead, the customers buy three. The warehouse has to triple its orders. The manufacturer has to triple output and labor. The supply chain is stressed. Prices go up.
麻豆精品 S淓veryone pays, 麻豆精品 S� says Yayla-Kullu. 麻豆精品 S淲hen I encourage companies to be more flexible with planning, the same goes for consumers. The entire system works better when we 麻豆精品 S檙e all flexible. 麻豆精品 S�
Stock takes the optimistic view that a 30% shortage on a tablet, for instance, means 70% of capacity is available either in person or online.
麻豆精品 S淭he products are out there. You might need to buy a different model or choose a different color, 麻豆精品 S� he says. 麻豆精品 S淥r you can buy from a private party 麻豆精品 S� some of those products are still in the original packaging. 麻豆精品 S�
When will normalcy return?
The key to stability goes back to the basics: a balance between supply and demand. The current surge in demand, on top of holiday buying, will cause more hiccups into the new year. Then, adjustments made to open the pipeline will have to be readjusted.
麻豆精品 S淚t will be the second half of 2022 before prices settle and this all clears up, 麻豆精品 S� says Yayla-Kullu. 麻豆精品 S淏ut business leaders will become better at risk-planning and the supply chain will be more flexible. Life will be better because we 麻豆精品 S檒l be ready for the next crisis. 麻豆精品 S�
The lessons for all of us: don 麻豆精品 S檛 panic, embrace variety, and maybe buy gift cards for the holidays or make a donation to your favorite charity. Or do like Stock and invest in an experience instead of a product.
麻豆精品 S淲e 麻豆精品 S檙e taking a vacation for Christmas, 麻豆精品 S� Stock says.
