Supply Chain Crisis Builds as Retailers Overorder to Meet Growing Consumer Demand

Shot of people at work in a large warehouse full of boxes.
kupicoo / Getty Images

Anyone looking for a ray of hope in the global supply chain crisis won’t get much joy from recent headlines, as everything from an energy crisis in China to a massive gas shortage in Europe have only worsened the problem — and led some retailers and manufacturers to overorder ahead of the holiday season.

See: It’s Supply Chain ‘Whack-a-Mole’ as Wide Range of Common Foods Face Shortage — Should You Stock Up?
Find: Walmart, Target and More Charter Private Ships To Combat Great Depression-Level Supply Chain Issues

Some companies are also placing orders too early in reaction to the supply chain panic, CNBC reported, which has done nothing to help the problem.

“Suddenly, retailers and manufacturers are overordering because of these supply chain issues, and that’s just leading to essentially an even worse scenario,” Jonathan Savoir, CEO of supply chain technology firm Quincus told CNBC’s “Squawk Box Asia” on Monday.

Supply chains across the globe have been disrupted on numerous fronts this year, ranging from COVID-19 outbreaks in key manufacturing centers to port closures, gasoline shortages, labor shortages and a lack of shipping containers.

As previously reported on GOBankingRates, the global supply chain crisis is such that some of the world’s leading shipping and transport organizations have asked the United Nations to intercede, warning that a failure of governments to act could lead to the collapse of the global transport system.

Make Your Money Work for You

Now that retailers have begun overstocking, Savoir envisions a ripple effect that could negatively impact wholesalers, distributors and manufacturers, which might lead to skewed demand forecasts and unfulfilled orders.

Similar concerns were brought up by RBC Wealth Management in an Oct. 15 note: “Because the problems are well known, orders for raw materials, component parts, and finished goods are now being placed earlier than normal, which is lengthening the queue, creating a vicious cycle.”

Meanwhile, you can expect a shortage of goods ahead of the holiday season, along with continued high prices as demand outpaces supply.

See: Top Holiday Toys, Gadgets and More To Shop Now — And What They’ll Cost You
Find: Mass Global Vehicle Shortage Hits 7.7 Million, Doubling Estimates — Consumers To Pay $90 Billion in Higher Costs

“Recent data point to tenacious supply chain and labor market disruptions,” Lauren Goodwin, Economist and Portfolio Strategist at New York Life Investments, wrote to GOBankingRates in an email note. “In our view, these disruptions make it more likely that inflationary pressures will persist.”

More From GOBankingRates

Make Your Money Work for You

About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.

Untitled design (1)
Close popup The GBR Closer icon

Sending you timely financial stories that you can bank on.

Sign up for our daily newsletter for the latest financial news and trending topics.

Please enter an email.
Please enter a valid email address.
There was an unknown error. Please try again later.

For our full Privacy Policy, click here.