What wholesale inventory says about goods in our economy
What wholesale inventory says about goods in our economy
Wholesalers sit in the middle of the supply chain — right between producers and retailers. And wholesale inventories were up 0.2% for the month of April, according to the Census Bureau.
And that’s important, because how much stuff wholesalers have in stock can tell us about how smoothly goods are flowing through the economy.
Wholesaling is big business, said Jason Miller, a professor in supply chain management at Michigan State University. “That is actually the largest revenue-generating sort of, call it ‘supply chain sector.'”
That’s because wholesale supplies both retailers and manufacturers.
When wholesale inventories run low, “then it suggests the robust consumer demand, meaning that we have a strong signal at the retail side,” said Nick Vyas at the University of Southern California — meaning retail sales could be strong.
But inventories can also run too low. That happened during the height of the pandemic. After years of streamlining inventories for just-in-time delivery, wholesalers struggled to keep retailers stocked.
“We may have actually gotten a little bit too far into optimizing our inventory, to our detriment,” Vyas said.
In the age of e-commerce, he added that optimized inventory is here to stay — though some wholesalers are keeping a bit more buffer around, adding “just-in-case” to “just-in-time.”
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