Even Santa Claus relies on a supply chain.
The elves, the workshop, the sleigh — they’re all part of an elaborate scheme to assemble, schedule, and deliver toys to children the world over. As for Santa’s American helpers, aka parents, they are heavily dependent on the commercial movement of goods across the globe to online or brick-and-mortar retailers so that they can get those presents purchased, wrapped, and under the tree in time for Santa to take the credit.
‘RIGHT THING TO DO IN THE MOMENT’: BIDEN SIGNS BILL AVERTING CHRISTMAS RAIL STRIKE
Logistically, that may be easier this year than in the last few years. A looming rail strike threatened to snag up the distribution of all kinds of goods and materials across the country, but that was put down at the beginning of December by an act of Congress. Many other supply chain bottlenecks that were a byproduct of the pandemic and the lockdowns have begun to sort themselves out.
The Washington Examiner asked several professors of supply chain management how the supply chains are faring with Christmas around the corner. Those who answered had some good news, as well as a warning, about what the new year could look like.
Supply chains are looking “much better — improved flow of goods and lower freight charges are all helping,” said Alok Baveja, professor of supply chain management for Rutgers Business School. “Inventory stocks look more normal than they have looked for a while.”
Hitendra Chaturvedi, a supply chain professor at Arizona State University, largely agreed on that point.
“[Things are] better than before because, remember, shopping for Christmas by retailers was done during the summer, anticipating certain demand and certain items for the holiday season,” Chaturvedi told the Washington Examiner. “The stress on the supply chain is not during Christmas. The stress is more on last-mile delivery.”
To help handle that problem, all the major private delivery services have brought on additional help. The United States Post Office brought on seasonal help as well, care of the new regular seasonal hike in delivery prices.
The fact that many supply chain issues have been ironed out doesn’t mean Christmas trees this year will be bursting with presents. With inflation raging and the threat of a worldwide recession looming, many parents are being more economical with their gift budgets. Some retailers have overestimated demand and will be stuck with too much product in the new year, warned Chaturvedi.
“Retailers have ordered more products, anticipating customers’ demands, which is not materializing,” he said. Early numbers show “only 5% growth in holiday shopping from last year,” which amounts to “degrowth” once we account for nearly 8% inflation. This also contrasts with the 15% retail growth last holiday season.
“We are going to see layoffs increasing in Q1 2023, and inventory will be written off,” he predicted. “Q1 will be a ‘resetting quarter.’”
In contrast, Baveja isn’t convinced retailers have massively overordered. Yet he does think the temptation is there, driven by the fluctuation in worldwide shipping prices.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
“It would be interesting to see how companies respond to two opposing forces — a threat of recession with the possibility of reduced consumer demand and significantly lower maritime shipping costs,” Baveja told the Washington Examiner. “If companies take advantage of lower shipping costs and build inventories, they risk being ‘stuck’ with large inventories if consumer demand drops due to an economic downturn. My experience tells me that companies will ‘ignore’ the lower shipping cost and not risk being stuck with inventories. But as they say — we shall see!”
Bottom line: Those who have the desire and the money this holiday season are more likely to have reliable options than in years past and will be able to rely on more robust supply chains. That may not amount to a Christmas miracle, but it probably beats a lump of coal in one’s stocking.
