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Supply Chain Issues Likely to Ease in 2024
It has been over three years since the pandemic shut down mines, factories, warehouses, ports, and stores all over the world, but supply chain issues continue to disrupt the jewelry industry. As the pandemic waned, many of those businesses never reopened. Of those that did remain in business, retailers canceling orders during the pandemic left them saddled with debt and product they could not sell, which led to layoffs, which led to further delays as workers had to do more with less, which led to high rates of turnover and underpaid, overworked employees agitating for better working conditions. It is a vicious cycle that laid bare all of the pre-pandemic supply chain problems that were just waiting for the right conditions to explode.
The supply chain operates on a tightrope in the best of times, from last-minute orders to fast turnarounds to the unpredictability of markets. When some piece of this global machine breaks down, it is often the suppliers and their employees who suffer the most. But there seems to be a glimmer of hope on the horizon.
Two Issues to Resolve: Inflation and Labor
Speaking with CNBC, Dave Clark, CEO of Flexport, said that “we could still see a bit of a muted holiday [shopping season],” but that inventory levels will begin to return to pre-covid levels in 2024. He also expects to see the movement of goods through the supply chain to return to normal in a year’s time.
Flexport is a supply chain logistics company who just recently acquired Shopify’s logistics service, so it is obviously in this company’s best interests for their CEO to proclaim a return to normality in the supply chain. Other experts, however, aren’t so sure.
For the supply chain to return to normal, inflation and labor issues must first be tackled. The first of those problems, the rate of inflation, seems to be slowing, but that could just be an illusion created by falling energy prices, Phillip Braun argues in Forbes. The good news, however, is that the Fed seems to believe that it has inflation under control, and that the economy is on track to move back toward equilibrium.
Investment firm BlackRock points to another source of supply chain woes, Fortune‘s Will Daniel reports: consumer spending habits have been changing for some time, and those changes have been accelerated by—you guessed it—the pandemic. So we’re left with a mismatch between what is being produced and what consumers actually want. BlackRock believes that the supply chain is slowly but surely adapting to these changes, and that the biggest problem going forward will be labor.
Which brings us to the other issue driving supply chain disruptions: labor. Daniel writes, “Some economists—and even billionaire CEOs, believe that rising wages are not necessarily an issue for the economy.” One CEO he interviewed for the Fortune piece said that inflation “driven by wage growth is fabulous. We should want wages to go up—that will help social issues in the United States.” It might also ease the strain of rising prices brought about by inflation.
Twenty-one states plus the District of Columbia are already set to increase their minimum wage in 2024. Meanwhile, UPS workers, a vital part of the supply chain, avoided a disruptive strike by winning higher wages. Earlier this year, the Wall Street Journal reported that wages are beginning to outpace inflation.
While the outlook might not be as cut-and-dry as Clark makes it out to be, the resolution of the issues at the root of supply chain disruptions—inflation and labor—could certainly lead to more predictable inventory levels, production, and logistics in 2024.