The pandemic has left the robust, flexible supply chain that Americans are used to stretched thin as the holiday season approaches. Like many industries, logistics, e-commerce, and retail firms are facing labor shortages, leaving companies desperate for more warehouse workers, truck drivers, and flight crews.
And shoppers’ growing obsession with online shopping and ultra-fast delivery has only made things worse.
“In a world where the expectation has become a second-day delivery, we haven’t really looked back,” Gad Allon, the director of the University of Pennsylvania’s Jerome Fisher Program in Management and Technology, told Insider. “We’re a community [of consumers] that supports a very short-term view of things and by doing so we’re taking away from any resiliency in the supply chain.”
Eight supply chain experts told Insider that shoppers could play a role in helping to relieve some of the pressure on the supply chain. Experts suggested shopping early, buying local, and even visiting thrift stores. Most of all, they said, don’t panic-buy goods and try to be patient.
The global supply chain is running on all cylinders to keep up with demand
Consumer demand has grown so quickly over the past two years, it’s equivalent to about 50 million new Americans joining the economy, according to Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, told Insider.
“There are very few, if any, industries that could handle a ramp up in demand like that, especially when you consider the lack of scalability in the supply chain infrastructure and manufacturing base,” he said.
Worries that US supply chains are crumbling might be overblown, according to Dr. Thomas Goldsby, the logistics chair at the University of Tennessee’s supply chain management program. “But they are failing to keep up with demand,” he added.
And shortages prompted by that high demand have further spurred consumption. The supply chain crisis has changed the way some people shop, according to a survey from Oracle. A whopping 91% of respondents changed their buying behavior by stocking up on items, buying items ahead of time, and monitoring shortages.
“Today, we keep seeing partially empty shelves which unconsciously push everyone to overstock whenever we spot the item available,” Dr. Andrea Sordi, a lecturer in the supply chain management department at the University of Tennessee.
Order items early and plan ahead to avoid shortages
Shoppers hoarding products “will likely be a sticky behavior for the foreseeable future,” Katie Thomas, Lead of the Kearney Consumer Institute, a think tank within global consulting firm Kearney, told Insider. Add that panic buying to holiday buying, and consumers already plagued by delays and low inventory will be facing yet another headache that could extend into next year.
As early as August, UPS President Scott Price joked that consumers should “order your Christmas presents now because otherwise on Christmas day, there may just be a picture of something that’s not coming until February or March.”
Now, e-commerce and retail giants like Amazon, Target, and Nordstrom are beginningdeals earlier than ever to encourage shopping and avoid holiday delivery delays.
Still, shoppers buying up products as quickly as they see them — and in large quantities — can result in a shock on the supply chain that’s known as the “bull-whip effect.”
“When you crack a whip, a small action at the hand propagates into a big effect at the end of the whip,” said Dr. P.K. Kannan, the Dean’s Chair in marketing science at the University of Maryland Robert H. Smith School of Business. “It is the same with supply chain — a small shock in demand upstream can create a big shock downstream.”
Order products strategically and buy locally when you can
Individual consumers can help assuage the bull-whip effect by ordering multiple items in one order or buying products online and picking up in-store. But experts are skeptical about whether or not such practices could have a widespread impact this year.
“The one thing that could essentially clear the traffic jam would be demand destruction,” RBC Capital Markets analyst Mike Tran told Insider. “It would not be great for the economy, but if people who were stuck at home started spending their money on experiences, instead of belongings, we would see less ships moving in and out of those ports.”
For shoppers eager to snag gifts before the holiday rush without pressuring the supply chain, buying American and shopping locally is also a good bet.
“Domestic supply chains are in far better shape,” Bayard Winthrop, founder and CEO of American Giant, told Insider. “And, if you shop locally, you’ll likely find what you’re after and you can feel good about where your dollars are going.”