We should wonder how productivity can soar when so many items are out of stock and companies don't have "that." This is a problem caused by supply chain disruptions. The ramifications loom large as shortages continue adding to the cost of doing business. Much of this is due to shipping issues. Adding to the problem is due to the cost of carrying inventory many companies over the years have moved towards a just-in-time system. This means not stocking huge quantities of goods but bringing them in just before they are needed has left shelves empty.
Yes, supply chain shortages are real and yes, they are destroying
productivity. A couple of months ago Shelly Fagin wrote a piece titled;
List Of Supply Chain Shortages. In the article, she delves into the
bottlenecks in the chain explaining why this is occurring. The list of
items having a difficult time getting to consumers is both broad and
long. It includes everything from different kinds of foodstuff, to
water pumps, and semiconductor chips. This has created a domino effect slowing the production and availability of even more products.
|It Is Hard To Sell From Empty Shelves|
Another issue acting as a double-edged sword on productivity is the "Amazon business model." The inefficiency of shipping products directly to consumers is a subject raised here on AdvancingTime in a recent post. This inefficiency was hammered home on December 26th and 27th on NBC news. While the news did not blame Amazon directly it attacked the wasteful process of selling online. NBC looked at how new products purchased online were often returned and the cost to a business for taking these items back. It reported it cost $33 to take back an item sold for $50 and how this is crushing profit margins. NBC went on to detail how many of these items end up in landfills were never used.
As a side note, it should be mentioned that many of these items ending up in landfills unused were manufactured in China. How ironic, the fact we buy so much from China rather than making more goods at home is one of the reasons for the current supply chain debacle. There is a slang expression we sometimes hear people say, "you can't make this shit up." This idiom is used to describe a situation, event, or action that is or seems especially bizarre, surreal, or hard to believe. To put this in context, Americans send their wealth overseas to buy the goods our system is designed to throw away.
When all is said and done the combination of sorry we don't have that and paying employees to take back items previously sold online so you can send them to a landfill decimates profits. In the latter case, it is also an environmental disaster. The only place the second matter can be cheered is that in some sick way it adds to the GDP. Yes, one of the dirty little secrets of our political leaders is, waste adds to the GDP.
Footnote; Information from the following articles fed into this post.
(Republishing of this article welcomed with reference to Bruce Wilds/AdvancingTime Blog)