For the newsletter and blogs, our topic for this month is “The Supply Chain Crisis.” Within the last few years, instability resulting from the pandemic and other reasons has caused a severe upset in supply chains. This instability has resulted in various states of scarcity and excesses with different products in the supply chain, affecting markets the world over.
Manipulating Prices
One negative aspect of the supply chain crisis is price manipulation. While in such a crisis, there are those who will attempt to take advantage by madly raising prices. You should not be one of those.
A fashion industry client of ours has been having a difficult time obtaining fabric for their products, and fabric has been the subject of significant supply chain issues. First if all, it must ship from countries halfway around the world. Second, like many industries, ports have had a difficult time in the last few years hiring enough staff, so fabric sits in ports for weeks at a time waiting to be processed. Because of these problems, the wait time for fabric has been tremendous, causing shortages.
A local fabric supplier has been taking total advantage of these shortages, charging our clients outrageous prices for the desperately needed fabric to produce their products. Our client has been paying these prices because they’ve had no other choice—but once they have enough fabric for the time being, they’ll be cutting ties with this vendor. That vendor will be losing a lot of business once the crisis has passed.
Now You See It…
Price manipulation can be especially prevalent in a “feast-or-famine” situation when a particular commodity (toilet tissue comes to mind) is completely unavailable, but then is suddenly crowding up the shelves. Merchants then inflate prices, knowing customers won’t do what they usually do when shopping—wait until something is on sale. Instead, they’ll rush out and buy it while it’s available, no matter the price.
Restricted availability can be even more aggravating when there is only a single source for a particular commodity. For example, I’ve been driving back and forth between my home in St. George, Utah, and Los Angeles, where I have another office and some family. Recently on my way back, I fueled up my car in Nevada—and paid $5.40 a gallon. I don’t believe I’ve ever paid that high a price for gas in my entire life. It’s an example of price manipulation, purely taking advantage of people driving to Las Vegas.
Don’t Do It!
There is plenty of temptation to compromise your honesty by manipulating prices, which then harms your prospects and customers. It’s up to you to assume a leadership position, hold a decency standard, and not lower it no matter what.
Doing otherwise could bring disrepute to your business. Imagine that as such a crisis happens, your buyers discover that you had falsely inflated prices, like our fabric vendor mentioned above. Compare that to the perception that you stood tall, were a strong leader, maintained your honesty, and truly assisted your customers in making it through such a crisis.
Who do you want to be in the long term? Perhaps in the short term, you’ll make a little extra money. But in the end, you need to be able to look back and realize you did something different by actually helping people instead of taking advantage of them. It’s a true measure of leadership to maintain honesty despite invitations to take advantage.
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