Kelley School prof talks supply chain effect on holiday sales
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As the holiday shopping season kicks into full gear, many are wondering how recent challenges in the supply chain will affect the availability of goods. Kyle Cattani, professor of operations management at the Indiana University Kelley School of Business, says while supply chains are starting to catch up after being stalled due to the pandemic, the challenges have almost reversed.
“The bad news is the major reason supply chains are catching up is because the economy is starting to slow down,” said Cattani. “For some supply chains the problem has now moved on to one of oversupply, and inventory is starting to pile up.”
In an interview with the Associated Press, Cattani said this holiday season will be a story of feast or famine.
“I strongly suspect that while we will see some shortages of goods. In other cases there will be fire sales as firms tried to get rid of the excess inventory that has accumulated as supply chains overreacted to the shortage as of the last year,” Cattani said. “So my advice is to be flexible and opportunistic. There will be shortages in many products, but there are also now warehouses of other products that are going to go on sale.”
Cattani says the shortage of microchips continues to play a factor in various industries, but with different results. He says it’s hard to predict how exactly the chip shortages will affect prices and availability, though prices are likely to increase.
“In particular, for this holiday season, you may have a harder time finding that shiny new phone. But on the other hand, General Motors has been in the process of clearing out backlogs of nearly completed cars. These are cars that were constructed with everything except for a few chips, and they’ve been waiting in parking lots. So now that the chips are becoming more available, the cars are leaving the lots.”
Looking forward, Cattani says the automobile industry’s transition toward more electric vehicles could cause a variety of supply chain complications over the next few years, particularly with regard to the production of batteries.