Covid pandemic supply chain crisis shifts to inventory crisis

Covid pandemic supply chain crisis shifts to inventory crisis

From empty shelves in 2021 to stock packed to the rafters of factories in 2022, the supply chain crisis has shifted to an inventory crisis.

And it may mean consumers feeling the pain of inflation can snap up bargains.

Data from software company Unleashed shows Kiwi companies are holding twice the value of stock compared to pre-pandemic levels – doubling to $8 million-worth now.

They looked at data from 4,500 companies in New Zealand, Australia and the United Kingdom and found a similar trend there too.

It’s called the Bullwhip Effect. In 2021, the supply chain crisis was at its worst, with ships stuck at sea and businesses globally struggling to get goods. So some started ordering large quantities of stock, to fulfil current orders and to have a buffer for future orders.

“The impact is significant, customers don’t want to miss out on sales, so they have gone with the lesser evil to some degree by overstocking,” Jarrod Adam from Unleashed told 1News.

But with the cost of living crisis hitting at the same time, margins are falling. And businesses need help with cashflow.

Clean Collective’s Holly McGrath says she’s had to go to her bank to ask for some extra help to get through the busy summer period.

“It’s really starting to impact our bottom line and cashflow,” she said.

And that could be good news for consumers, with some businesses forced to discount products to get them out the door. But that’s not good news for struggling business owners.

“For those businesses that have to foot the bill, and their staff, that’s a real challenge,” Adam said.

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