According to CNBC, excessive inventory levels have put pressure on the profits of many companies, leading to surplus supply and the inability to reduce storage costs. In a recent CNBC survey, 36% of respondents said they expected inventory levels to return to normal in the second half of this year, 21% hoped for normalcy in the first half of this year, and the rest hoped for the first half of 2024. However, supply chain managers cannot be certain about the timing of inventory relief.
Mr. Paul Harris, Vice President of WarehouseQuote, said: "Some of our manufacturing clients are facing many challenges when inventory is too high. Most of them choose to keep inventory and oppose liquidation." Along with that, 27% of survey participants are selling inventory on the secondary market due to the impact on the company's profits when storage prices increase.
Many customers with perishable goods are selling them on the secondary market to avoid product spoilage. However, if the secondary market is not a good option, they are forced to dispose of the products. Investors are concerned about income, and profit trends, and expect stock prices to fall. Supply chain pressure will be one of the factors affecting business figures.
"Inventory transportation costs continue to rise due to inflation and slow delivery. From here, there will be risks of increased sales and pressure on inventory management," said Mr. Mark Baxa, CEO of CSCMP.
Nearly half of the respondents said that the biggest inflation pressure they have to pay is warehouse costs, followed by other items such as rent and labor costs. ITS Logistics shared that many customers have to use containers.
However, according to him, the solution to reduce this pressure is that companies need to have a flexible inventory management strategy, combined with investment in technology to optimize production processes and supply chains. Companies should also look for ways to reduce inventory by seeking new suppliers, using effective inventory management software, or changing sales strategies to accelerate shipping progress.
At the same time, governments also need supportive policies to help companies overcome difficulties during this time. Governments can provide funding and loans to help companies reduce storage costs and invest in technology. Additionally, governments can also promote domestic consumption activities to help companies consume goods and reduce inventory.
In conclusion, the excessive inventory situation is putting pressure on companies profits and supply chains and requires a flexible inventory management strategy, investment in technology, and supportive government policies to overcome this difficult time.
Source: Vnexpress, CBNC