Scarcity

As we come out of the economic destruction of the pandemic, we struggle with scarcity in every part of the economy. Scarcity of raw materials, scarcity of transport, scarcity of components and scarcity of workers.

Think this isn’t serious? When the Executive Leadership of well run manufacturing companies are now spending 8 hours each day trying to get routine components or raw materials, and their purchasing teams are repricing products every 2 weeks, the US has a scarcity problem that is jacking up the price of just about everything.

How did we get back to a smoothly functioning global economy like we had in February, 2020? It is a long process, so be ready to be patient.

When China shut down in early 2020, they stopped or slowed production. For most of my Vistage Members this gave them time to breathe and figure out how to react to slowdowns as high as 80%. From a personnel standpoint, the PPP helped people keep their jobs at least for a while.

China recovered first and started producing more, but the ships were misaligned and that continues. Longshore workers are still not back to levels that match the goods flowing in so everything is backed up at the ports of Los Angeles and Long Beach. Containers that cost $2000 to ship are now over $7000 – just to transport the goods from China to L.A. And then they sit for 2 weeks until they can get cleared and shipped elsewhere in the US.

And, while retail and restaurants are permitted to reopen, their crews are gone, many never to return to the industry. So, if they managed to survive with take-out and app based deliveries, they have to train a whole new crew to open fully.

Add natural disasters like the ice storms in the south, and we are seeing the shortages of catsup packets and other humorous deficiencies that only highlight the extent of the mess.

I suggest we all take a deep breathe and practice empathy or at least patience. Each day, focus on the top 3 steps that will give you the best long term profitability. Drop the bottom 10% of products. Fire that unprofitable customer. Start charging for freight. Thank your 20 best customers. Thank your best team members. 3 steps every day. And breathe.