NMSU business professor: Plan ahead, be mindful during holiday shopping

The holiday shopping season is officially underway, and a New Mexico State University professor has some advice for hitting the stores and what to expect this holiday season.  
 
Victor Pimentel, assistant professor in supply chain/business analytics in NMSU’s College of Business, said almost all countries and companies are open and working to get back to semi-normal, but there’s still a problem with inventory.  
 
“We have a raw material inventory problem. Then it must be shipped, but we also have a transportation problem, at least in the U.S.,” Pimentel explained. “Cost of transportation from countries overseas like China are still through the roof. So, we’re still going to have those problems, but not as big as last year.”  
 
Holiday shopping during 2021 looked quite different compared to this year, which may have to do with less fear of COVID-19, Pimentel explained. With higher demand and more shoppers, companies also face the issue of not having enough staff on their teams to handle all their customers.  
 
“Simple things like a hot dog at Costco, or pizza at Sam’s Club, right now they’re having problems getting enough dough at different stores,” he said. “Just getting products from point A to point B by transportation is a problem right now. There are not enough drivers, and some people are still trying to get back to work but others are still not happy with the jobs that are available. All the companies I’ve talked to said it’s been a struggle to hire people.”  
 
Pimentel added as companies continue to catch up with supply chain issues, some may run into overcompensating products, otherwise known as the “bullwhip effect.”

"For example, you have a company and during COVID-19, you didn’t have the chips that you wanted. During a certain two weeks, there were no chips, but there was a demand for the chips. So, you overcompensated by making more and that brings your inventory to double – but the demand for chips is stable, so people aren’t going to buy more chips because they couldn’t last week,” he explained. “The demand is stable, and now you have extra products at the store. You are artificially creating a vacuum of demand on the bottom, and then you’re overcompensating in the next cycle. The bullwhip effect is in full effect right now.”  
 
On top of the supply chain problem, Pimentel said there’s a cloud of uncertainty ahead which makes it difficult for suppliers to forecast their future regarding finances. He advised to be cautious of spending during the holidays and thinking ahead on saving money where you can. 
 
While it’s important to plan, set a budget and get your holiday shopping done as soon as possible, there’s also more to consider when it comes to purchasing in bulk – especially as the economy continues to slowly recover from the effects of the pandemic.  
 
“Don’t overspend or over-hoard things because you might need them – that helps create that bullwhip effect. Think about others. Our individual decisions build up. If 100 people over-hoard at Walmart, that creates a crisis for others. Just be conscious of what your individual action can do to others,” he said. 
 
As the clock ticks closer to Christmas, it’s best to order items online as soon as possible to ensure your delivery will be on time, keep track of the shipping and delivery status, and if you’re sending any gifts through the mail, ship them ahead of time before the last-minute rush.