Demand outstripping supply is stressing businesses

“A whole lotta things that I never done, But I ain’t never had too much fun,” is one of my favorite lyrics, with thanks to Billy C. Farlow and Bill Kirchen, two of Commanders Cody’s Lost Planet Airmen.

Unfortunately, that’s not what I’m referring to when I bring up too much of a good thing. Our current economic situation (unprecedented demand), coupled with supply chain disruptions and the ubiquitous lack of labor availability, have provided many businesses with a situation where they have too much of a good thing. Too much demand — coupled with insufficient resources both human and raw material to meet demand — is troublesome. This is being manifested not only in manufacturing; transportation, hospitality, architecture, health care, to name a few, are all experiencing similar demand/supply misalignment.

And just to keep it really interesting, the current level of inflation is keeping us all on our toes. The Fed strives for low inflation, around 2 percent. However, it’s running quite a bit higher now. Again, too much of a … well, you get it.

The C suite is populated with serious type A personalities. Many executives have always thought, too much is just enough. Mae West said, “Too much of a good thing is wonderful.” I am personally having a hard time adjusting to this new paradigm. But, as we all know, we must adapt or perish.

I do have one reassuring thought regarding this current imbalance. I suspect it will be a temporary situation. I expect the other shoe to fall and supply demand balances will return to most markets. After all, the invisible hand of the market is always at work. Prices will rise and/or demand will drop to match. At least it always has in the past.

There is some really serious demand being generated in domestic manufacturing these days. The offshore sourcing “advantage” utilized for so long has recently turned out to be anything but an advantage. I’ve heard talk of an expected $1 trillion of reshoring of manufacturing being brought back to America. If that is correct, the imbalance may continue to be around for a quite some time. In the 1950s in America, when there was very high demand for everything, an economic miracle ensued. Somehow, we managed to meet the demand then, but the world is a bit more complex these days.

Here is a personal story about getting too much of a good thing. In my youth, I was a passionate deep powder snow skier. We traveled far and wide to get to the highest altitude, deepest, lightest fresh powder. Finding too much of it was inconceivable to me.

One time after a particularly big snowfall, I was skiing — more akin to floating — in the freshest, deepest lightest snow imaginable. Chest deep. Loving life. Then all of a sudden, I went under. The snow depth (while I skied through a drift) went over my head, and it was pitch black under that snow. There is no light down there. I never expected that. I panicked and flailed wildly. In life, as in business, as I said, be careful of too much of a good … well, you know.

Read the article on Smart Business.

Posted in: News, Steve's Pep Talks