Rob Handfield, professor of operations and supply chain management, explains how, since the pandemic, retailers have pressed suppliers to increase the production of items. Now, companies that have ordered large numbers of products have overstocked inventories and are now canceling supplier orders.
“Most companies over-expanded in 2022 and said, ‘OK we’re going to order more than we think we need, we think demand is going to continue to be high,’ and all of a sudden we had inflation, we had other shortages, and they were stuck with too much inventory,” said Handfield. “Then they’re telling their suppliers, ‘Oh, we overcommitted.’”
Read more on The Wall Street Journal.
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