How inflation affects the predictability of consumer behavior

Consumer behavior is (usually) highly predictable. Consumption is habitual. However, some events disrupt behavior and consumption, like the pandemic. Those shifts in behavior greatly impacted supply chains and warehouse space and today it is still a real problem. Currently, inflation is a hot topic and is making consumers think twice about their spending.

How does inflation affect consumer behavior exactly? The budget constraint model used by economists illustrates the possibilities for consumer behavior changes.

The consumer has a choice between purchasing two goods with a set amount of buying power. A price increase in one would reduce the quantity of the other good able to be purchased. Consumers consider trade-offs such as these at the original prices and their preferences, based on the highest utility provided, predict their normal buying behavior. Once a price increase is introduced, the preference is based on a new budget constraint.

The typical response is to consume less of a higher-priced product. This is the substitution effect. This occurs when a price changes and this incentivizes the consumer to purchase less of a good with a relatively higher price and more of a good with a relatively lower price. The buying power of income has been reduced – the income effect.

Humans are unique so there is always a range of possibilities for consumer behavior when facing price increases on consumer goods. The budget constraint model for making utility-maximizing choices can help manufacturers of goods determine this range, thus the impacts on sales.

Inflation accelerated unexpectedly to 8.6% in May, the largest annual increase since 1981 – according to the US Labor Department. The supply chain, rising rents, high cost of commodities – inflation is expected to remain high through 2022. Predicting consumer behavior today is much more difficult than ever before.

KTI Ltd provides food-grade, flexible storage solutions to manufacturers with multiple locations in the southeastern United States. Customized solutions with flexibility allow our customers to scale up and down as needed, based on changing or seasonal demand. Visit our website for more information: https://www.ktiltd.com/test/warehouse

Regionalized Supply Chains and the Effect on Warehouse Space

Rather than global supply chains, companies are moving their supply chains closer to those they serve. These regionalized supply chains have multiple benefits.

Improved supply chain transparency, which will help companies meet regulatory requirements, optimize operations, guarantee the quality of outputs, and ensure the sustainability of processes, is one such benefit. The whole supply chain is easily mapped and the potential bottlenecks and vulnerabilities known.

Other benefits include a shorter, more responsive supply chain, improved response rates due to market changes, and supply chains that are not complex compared to the global supply chain.

For these regionalized supply chains, one drawback is that companies often find they lack the warehouse space needed. KTI LTD is a third-party logistics company with multiple locations, including SQF-certified space. If you’re looking for flexible, short-term, overflow, or long-term warehouse space, we can provide a customized quote to meet your needs.

Warehouse Space Demand Increasing

Companies have changed their inventory methods to protect themselves against the supply chain problem. In addition to practices like safety stock, companies are now hoarding warehouse space – taking warehouse space they can’t fill or don’t currently need to be prepared. New warehouse space is being pre-leased and close to 100% of existing space is already filled. The supply chain problems are interrupting the construction of new space due to shortages and delays of building material.

It could be 2024 before things normalize according to experts and because of the explosion in e-commerce during COVID and becoming the new normal, this could continue into 2025 or beyond.

To tackle this issue, companies can rethink and maximize their current space. Retrofitting old space, splitting a single-use space into multiple spaces, and repurposing existing space can help.

KTI is a 3PL with multiple locations offering flexible storage solutions for companies on a short and long-term basis. If you’ve run out of solutions to find, maximize, or repurpose space, give us a call to discuss your needs – (540) 994-9899.

How safety stock is the newest method to avoid another disruption

The Just-In-Time Inventory System is associated with reduced waste and carrying costs. Before the pandemic, this method was widely used but the method’s flaws were illuminated during the pandemic. Finished goods couldn’t be produced and retailers ended up with empty shelves. Now those who oversee supply chains recognize the importance of “safety stock”.

Storing safety stock in the warehouse can help manufacturers work through disruptions. While disruptions are becoming less and less, it’s hard not to think about the “what-ifs”. We’ve all learned an important lesson about how fragile and dependent we are. In addition to safety stock, a good inventory strategy should include multiple suppliers and sourcing more goods domestically, shortening your supply chain.

Many manufacturers are facing the problem of warehouse space shortage, so safety stock may not be an option. Sometimes it’s just a matter of optimizing the warehouse space, adding a mezzanine, etc. It’s amazing how a little rearranging can clear out space for more. However, if you are a manufacturer who is still in need of space, consider partnering with a 3PL such as KTI. KTI offers flexible storage solutions and has access to warehouse space across the country – from the east coast to Texas. In addition, we are an asset-based transportation provider.

Visit our home page to read about how we can provide solutions to your problems: KTI LTD

Best practices for dock processes to improve productivity

Benchmarking studies, such as those published by WERC, allow us to compare and improve our processes. Here are a few best practices in receiving:

1. Dock appointments – this allows labor and dock utilization to be optimized
2. Use of Advanced Shipping Notices
3. A commitment to unload all loads within a set amount of time to prevent traffic jams
4. Receipts acknowledged and posted as received in real time
5. Product labeled, scanned against the ASN, and assigned to the proper put-away location
6. Assigning tasks to individuals or very small teams for accountability
7. Gathering data on dock to stock time, receiving errors, and dock utilization can ensure continuous improvement.

Read more like this here

How quantum methods will help businesses consider more variables to make better decisions

We are constrained in all aspects of life – time, money, and even health. These constraints drive our decisions and actions every day.

Economic business decisions have constraints as well – volume, labor, time, and cost, along with minimization and maximization for desired outcomes.

If a company doesn’t possess the analytic tools to process large volumes of data, constrained optimization isn’t being used to make better decisions. There are several reasons why constrained optimization isn’t used currently:

1. Classical computers can’t handle the volume of data we are seeing.
2. Classical software isn’t designed to compute large variable problems with specific discrete constraints and objectives.
3. Classical computations can only deliver one result, not a range of possible outcomes that may be more optimal.

This is where quantum computing rules in the world of data and data-driven decision-making. It allows for a three-dimensional state – variables, objectives, and constraints are represented.

The result is a far better representation of real-world complexities and nuances. This could be useful in manufacturing supply chains, retail, and logistics.

Quantum computers aren’t quite ready yet but there are new powerful ways to conduct constrained optimization on conventional computers using quantum methods.

Sources: Supply Chain Management Review, Quantum Computing Inc.

EDI allows for the exchange of data between you and your customers and partners in an efficient and secure manner

Electronic Data Interchange (EDI) is the computer-to-computer exchange of data and documents in a standard format between business partners, offering multiple benefits for an organization.

EDI drives digital transformation and is often the first step in the journey. It helps by automating operations, which drives growth through improved profit margins, engagement, and customer satisfaction and loyalty. Some of the benefits include:

1. Cost Savings
2. Enhanced Accuracy
3. Efficiency
4. Increased security
5. Visibility
6. Data for analysis and prediction

EDI allows for more time focused on business innovation and growth because your processes become faster and more cost-effective. Simplifying processes and a stream-lined workflow create value for both employees and customers.

KTI LTD has EDI capabilities and can help facilitate the adoption of EDI in your organization to better serve your customers. We offer SQF-certified warehouse storage in multiple cities, asset-based transportation, and food-grade plastics processing. If you’re on the fence about working with a 3PL provider, contact us with any questions. (540) 994-9899 or ask them here.

Source: Epicor

Outsourcing to a 3PL can improve customer satisfaction, efficiency, and essentially your bottom line

Increased demand from your customer is a great problem to have. However, if you weren’t ready for that increase, it can result in a decrease in customer satisfaction, frustration, and waste.

It doesn’t always make sense to outsource, it may just be a matter of reviewing the processes and making improvements. But here are a few good indicators that outsourcing could help significantly:

1. Crowded warehouse – Narrow aisles, unorganized and loose pallets, buried product. This leads to inefficiency and can also result in employee injury and frustration.
2. Declining customer satisfaction – Late orders, wrong shipments, damaged shipments. This can result in your best customer finding another supplier.
3. Lost inventory – Manual tracking, input errors, mislabeling. Lost inventory is lost money and time.
4. Increased costs of doing business – Example: freight costs. This has a significant impact on the bottom line.
5. Focus – Your management team who was responsible for growing your business is now focused on these tasks which could easily be outsourced. In addition, many of the former issues may not exist if management had the time to oversee – such as renegotiating freight rates or ensuring the proper processes are being adhered to in inventory management.

If some or all of these are all too familiar, it’s suggested that you consider outsourcing these tasks to a 3PL. This will allow you to refocus on growing your business and you will be able to leverage the expertise of a 3PL who has invested in the processes and technology needed for accuracy and cost-effectiveness.

KTI LTD is a family-owned, asset-based 3PL provider headquartered in Virginia with multiple southeast locations and growing. We offer flexible and scalable solutions for manufacturers to meet the current demand their facing without having to invest capital into infrastructure.

Learn more here: KTI LTD

Why partnering with a 3PL improves the bottom line

Paying money to save money? It may not make sense that paying a 3PL provider can save money. However, the tasks which are outsourced to a 3PL may not always be done in the most cost-saving way in-house. 3PL providers are efficient at tasks involved in the supply chain – warehouse storage, fulfillment, inventory management, transportation, and shipping. These are a 3PL’s core competencies but these tasks are not yours. They’ve invested in the equipment, technology, education, and staff to efficiently handle these tasks. Most are part of a network of providers which can be beneficial through referrals, giving companies the ability to strategically place their products closer to their customers.

3PL providers have the ability to scale staff or warehouse storage to support your growth. With a shortage of warehouse space, the only option for many companies is to invest into expanding their own warehouse space. This may be more profitable in some situations, but most companies would prefer to invest that same capital into marketing or product development.

If you’re experiencing growth and would like to partner with a 3PL who can provide flexible and scalable storage solutions, asset-based transportation, and an experienced staff to maintain as well as transport or pick, pack, and ship your inventory, fill out our request a quote form here.

KTI LTD is a family-owned asset-based 3PL provider based in Pulaski, VA with multiple southeast locations and growing. We are part of multiple 3PL networks so if we can’t help you, we can find someone who can.

Implementing BADA – Buy Anywhere, Deliver Anywhere Capabilities to increase customer satisfaction

COVID-19 triggered a turning point in the digital and e-commerce segments. This led to retailers competing on delivery time. How do retailers compete in this new arena?

Offering BADA service is one method – the Buy Anywhere, Deliver Anywhere model. This allows organizations to offer the services that meet the demand. However, there are challenges which come from offering BADA service. While COVID-19 created the demand, it also impacted the supply chain that comes with the demand: material shortages, transportation issues, and tariff issues, to name a few. Inventory which is a considerable distance away from the closest DC or inventory which is high-value presents additional hurdles.

To implement the BADA model, inventory visibility is key. The products must be tracked through the supply chain. Inventory can then be positioned closer to customers, driving revenue. This includes visibility at the store level, which helps organizations to know at all times what items are available in proximity and how those products can be routed quickly to the customer. Innovative technology helps to provide business intelligence on consumer buying behavior.

Retailers who are utilizing these tools are able to serve the customer in this new marketplace.

This demand is creating change in all areas of the supply chain. If you’re looking for a 3PL partner to meet this demand, KTI LTD is a 3PL provider with four locations in the southeast and growing. We provide flexible and scalable storage solutions as well as asset-based transportation.

Visit our website for more information on the services we provide and contact us with any questions: KTI LTD

Source: Inbound Logistics