Preparing for Supply Creation, Demand, and Supply
As we move towards the end of the pandemic and a surge in business, Geoff Wilson provides a post for leaders to help navigate the next economic journey.
We are in a world of opportunity and hurt. Demand is high, spirits (and prices) are up, and supply is constrained. What’s a leader to do?
When I was a young man I learned microeconomics on the back of a simple diagram with two lines…one for demand (always downward sloping) and one for supply (this one goes up).
Turns out, the microeconomists were right. Mostly.
We are living in a fever dream at the moment. It comes with the pleasure fog of rising demand for…well…everything as people regain the confidence that they can interact and transact with one another without threatening lives. It also comes with the tormenting nightmare of not being able to hire, source, or build the products and services that they need.
There’s plenty of blame to go around. The most plausible explanation is that we are simply mired in the midst of a massive supply chain bullwhip that is synchronized around the world for once. As positive and negative information trickles out across industry chains, individuals firms attempt to adjust…and they do so badly.
Add the labor-market distortions brought by extended unemployment benefits, extended school and family support organization closures, fear of the unknowns around coronavirus reoccurrence, and general inflation; and you have a multi-faceted political and commercial game that would make George R. R. Martin blush.
But all of this is couched, at least for the moment, within a massive environment of opportunity. Demand is popping for most of the economy, and poised to pop for much of the rest.
So (as I’m often wont to ask), what’s a leader to do?
Here are a few ideas.
Key points include:
- Prioritizing the opportunity
- Time to innovate
- Explore new supply chain structures and mechanisms
Read the full article, Revenge of the Microeconomist in the Real World, on WilsonGrowthPartners.com.