Cardboard shortages put additional stress on the supply chain heading into the holidays

Shawn Knight

Posts: 13,601   +139
Staff member
Forward-looking: The Covid-19 pandemic exposed flaws in the just-in-time inventory management method. Looking ahead, we suspect supply chains will do a better job of holding inventory to avoid repeating this mistake again in the future.

Don’t look now, but yet another staple of modern society is in short supply as we head into the holidays. NBC News reports that much like computer chips, packaging materials made out of paper, plastic and cardboard are in short supply, and prices have skyrocketed.

Andrew Hogenson, the global managing partner of consumer goods, retail and logistics at Infosys Consulting, said it all comes down to supply and demand. In this instance, you have a constrained amount of supply of raw materials and an increase in demand.

How did we get here, you ask?

It’s a chain reaction, really, that started with the Covid-19 lockdown orders last year which slowed production at manufacturing facilities. People also modified their shopping behaviors, ordering more products online in an effort to avoid interacting with others in public. This only pushed the demand for packaging and shipping materials higher.

And lest we forget the winter storm that hit Texas back in February, shutting down production of plastics used as shipping materials. This prompted shippers to increasingly turn to alternatives like cardboard and paper, putting even further strain on the supply chain. Then there's the shipping bottleneck, slowing the import of goods like paper pulp from China.

Hogenson believes this holiday season is going to be an eye-opener for everyone.

Image credit Tania Melnyczuk

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p51d007

Posts: 2,888   +2,266
Companies have been keeping inventory low for obvious reasons. This "scamdemic" has uncovered the stupidity of not keeping enough inventory. Now, will companies learn from it?
No, why should they? They just jack up the price in some cases.
 

Revolution 11

Posts: 89   +100
Companies have been keeping inventory low for obvious reasons. This "scamdemic" has uncovered the stupidity of not keeping enough inventory. Now, will companies learn from it?
No, why should they? They just jack up the price in some cases.
Low inventory is one thing. What about spare productive capacity? Keeping a few extra production machines in your corporate inventory will allow for faster increases in (cardboard/insert good here) production.
 

cliffordcooley

Posts: 13,057   +6,368
Low inventory is one thing. What about spare productive capacity? Keeping a few extra production machines in your corporate inventory will allow for faster increases in (cardboard/insert good here) production.
Sure lets spend millions/billions on a production line we rarely use. A line that will take more than a decade to profit from. A line that will need maintenance at a higher ratio per run time than a normal line. That makes little to no sense.
 

ScottSoapbox

Posts: 149   +254
Low inventory is one thing. What about spare productive capacity? Keeping a few extra production machines in your corporate inventory will allow for faster increases in (cardboard/insert good here) production.
Those extra machines cost money. So your brilliant plan raises prices *all of the time* they are sitting idle in nonpandemic times (which is far more of the time that the rare pandemic).
 

captaincranky

Posts: 17,623   +6,411
California comes to mind.............
For me too. However, (I think) much of the wood(s) involved for cardboard production,are fast growing farmed species, such as southern white pine.

It's the stands of Sitka spruce,(Picea sitchensis), and California redwood, (Sequia sempervirens), which are a major concern, as well as being irreplaceable for tens of generations.

FWIW, many conifers actually need wild fires, to allow their seeds to pop out of the cones, and not have their growth inhibited by weeds growing around them- Granted, they don't need anywhere near the amount of fire, with which California has provided them.
 
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captaincranky

Posts: 17,623   +6,411
Intelligence, only that one is real.
Too many people believe the lies of companies and governments and think both want their well-being...
FWIW, consumer greed and stupidity have brought these circumstances on themselves. "Want" is conveniently confused with "need", and the prices are, "off to the races".

Madison Avenue, should have its name changed to, "Ministry of Propaganda Way".;)
 

gamerk2

Posts: 626   +538
Low inventory is one thing. What about spare productive capacity? Keeping a few extra production machines in your corporate inventory will allow for faster increases in (cardboard/insert good here) production.

There's no economic benefit though; all you'd do is incur the expense of purchasing spare production you don't plan to use. Nevermind shortages aren't hurting the suppliers anyway; they can just raise prices to cover the difference.
 

gamerk2

Posts: 626   +538
California comes to mind.............

I note there's 4x as many houses on the market as there are people living on the streets. The problem is the market has decided to price out lower-income residents in order to compete over higher earning ones. Simply put: The housing market is ignoring supply/demand in order to maximize profits.

This effect happens pretty much everywhere you see rapid economic growth; the lower rungs of the economic ladder get ignored in order to chase those with more disposable incomes.

The easy solution is to do something like Ireland does and mandate that every housing development put aside some percentage of it's units (say, 10%) toward lower-income housing. Aside from making those units financially within realm of purchase by lower income earners, this also helps keep the rest of the market from overheating; prices go up too much, those more bare-bones accomodations start looking better even for higher-income earners.

Really, the housing market in general shows how unregulated capitalism almost always ends up.
 

BadThad

Posts: 729   +812
If prices aren't starting to drop six months from now you'll know that its by design and has nothing to do with any disease except greed.

What about inflation? Under the Biden ineptocracy it's reaching levels never seen since Carter.