There has been a trend I have noticed recently, with many topics discussing pellet shortages, FX airgun wait times, and just general rants about the times in which we live.
I have been in international businesses all my adult life and I am constantly amazed by the relatively low level of knowledge that most folks (not just here in the USA) have about just how complicated and interconnected all of our supply chains and economies are. I find it amusing to read the simplistic answers to what is a very complex problem. For example, a common one is “If only people weren’t getting unemployment then they would rush out to fill all those jobs”…or “its the governments fault”..etc. A number of states have actually cut off the extended unemployment benefits. Did it make any difference in their EMPLOYMENT rate? Nope. If things were as simple as some folks believe this all would have been solved by now.
We have a whole set of problems, each complex in their own way, and the interaction between these creates even more complexity. At some point enough complexity leads to chaos in any system. That’s kind of where we are now. Not only are we facing supply side chaos from pretty much every reason (largely, but not exclusively, due to Covid) but we have our own logistical challenges, often brought on by short sided policies from companies here in the US.
We are seeing the end of a long chain of decisions from companies, large and small, which placed cheap and easy (normally good things) ahead of sustainable and resilient. The companies that managed to balance these two ends of the spectrum are doing better than those who abandoned one side for the other. If your products are not competitive on Price/value your company will die, soon. On the other hand, if you do not have a sustainable/resilient supply process then your company will die, maybe after a little longer than the first example.
At the same time, we have unprecedented demand for some goods, but more importantly, for some types of DISTRIBUTION services. The pandemic has lead to an explosion of demand for online shopping and associated delivery services. The demographic which used the least amount of these services, those 65+, have suddenly become complete converts to remote purchasing. This was initially driven by existential threat of Covid (No one wants to die in order to go out and buy a new airgun) but has been embraced because of the convenience and “Christmas in July” feeling when stuff just shows up at home. Similarly, we should not be surprised that people are somewhat less than eager to go out and do public facing/traveling jobs, like driving delivery trucks, in the face of the same existential pressures. Couple that with the fact that these workers now have many other options, especially since “Work from Home” has suddenly not just become viable, it has been PROVEN to be viable by the experiences of the last 18 months. This means that if you want them to choose driving a truck, or working in a distribution center, then you are going to have to offer them a package that is attractive, or at a minimum, more attractive than the other offers they have. Given that some of those offers probably do not include a commute, the need for child care while they are away from home, etc. you’re going tp have to put up more cash to compete. This is then hard to do when your margins are already being squeezed by the supply disruptions and shortages and cost increases from suppliers and other workers.
Like I said, its not simple.
And, its going to take a while to resolve itself. It will eventually resolve itself, but one thing is for sure: however it resolves itself will not look like the “Old Normal”.
Just one man’s opinion folks, so don’t get your knickers all in a twist.
Chris
I have been in international businesses all my adult life and I am constantly amazed by the relatively low level of knowledge that most folks (not just here in the USA) have about just how complicated and interconnected all of our supply chains and economies are. I find it amusing to read the simplistic answers to what is a very complex problem. For example, a common one is “If only people weren’t getting unemployment then they would rush out to fill all those jobs”…or “its the governments fault”..etc. A number of states have actually cut off the extended unemployment benefits. Did it make any difference in their EMPLOYMENT rate? Nope. If things were as simple as some folks believe this all would have been solved by now.
We have a whole set of problems, each complex in their own way, and the interaction between these creates even more complexity. At some point enough complexity leads to chaos in any system. That’s kind of where we are now. Not only are we facing supply side chaos from pretty much every reason (largely, but not exclusively, due to Covid) but we have our own logistical challenges, often brought on by short sided policies from companies here in the US.
We are seeing the end of a long chain of decisions from companies, large and small, which placed cheap and easy (normally good things) ahead of sustainable and resilient. The companies that managed to balance these two ends of the spectrum are doing better than those who abandoned one side for the other. If your products are not competitive on Price/value your company will die, soon. On the other hand, if you do not have a sustainable/resilient supply process then your company will die, maybe after a little longer than the first example.
At the same time, we have unprecedented demand for some goods, but more importantly, for some types of DISTRIBUTION services. The pandemic has lead to an explosion of demand for online shopping and associated delivery services. The demographic which used the least amount of these services, those 65+, have suddenly become complete converts to remote purchasing. This was initially driven by existential threat of Covid (No one wants to die in order to go out and buy a new airgun) but has been embraced because of the convenience and “Christmas in July” feeling when stuff just shows up at home. Similarly, we should not be surprised that people are somewhat less than eager to go out and do public facing/traveling jobs, like driving delivery trucks, in the face of the same existential pressures. Couple that with the fact that these workers now have many other options, especially since “Work from Home” has suddenly not just become viable, it has been PROVEN to be viable by the experiences of the last 18 months. This means that if you want them to choose driving a truck, or working in a distribution center, then you are going to have to offer them a package that is attractive, or at a minimum, more attractive than the other offers they have. Given that some of those offers probably do not include a commute, the need for child care while they are away from home, etc. you’re going tp have to put up more cash to compete. This is then hard to do when your margins are already being squeezed by the supply disruptions and shortages and cost increases from suppliers and other workers.
Like I said, its not simple.
And, its going to take a while to resolve itself. It will eventually resolve itself, but one thing is for sure: however it resolves itself will not look like the “Old Normal”.
Just one man’s opinion folks, so don’t get your knickers all in a twist.
Chris