Chamber forum highlights supply chain woes

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  • Chad Wilkerson, branch executive of the Kansas City Federal Reserve’s Oklahoma City office, addresses the audience during a Nov. 18 forum at Cameron University. Wilkerson joined Lawton businessmen Phil Kennedy and Hossein Moini for a forum about the global supply chain disruption.
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LAWTON — Recently, Comanche Lumber Co. President Philip Kennedy asked one of his window suppliers why deliveries were taking longer than usual.

 

Kennedy assumed that a shortage of workers was causing the problem, but the supplier said that wasn’t the case.

 

“He said, ‘No, it’s not. We’re sending people home,’” Kennedy said. “He said, ‘But we can’t get the raw goods to build the materials that we need.’”

 

The supplier said he was having trouble getting glass, which is mostly produced domestically, and hardware, most of which comes from China, Kennedy said.

 

“So, we see that supply chain break down in China,” he said. “That’s impacting our ability to have those goods finished and in my yard, so I can take them out to somebody building a home.”

 

Kennedy’s anecdote illustrated the impact of global supply chain disruptions, which are making it difficult for merchants to keep up with consumers’ demand for products.

 

The Lawton-Fort Sill Chamber of Commerce and Cameron University hosted a forum about supply chain disruptions Nov. 18 in Ross Hall on the CU campus. The event, which was open to the public, explored how those disruptions are playing out on national and local levels.

 

Demand for products

 

Supply chains are networks between companies and suppliers to produce items and deliver them to consumers. Companies establish those networks to cut costs while staying competitive with other businesses.

 

A mix of rising demand for products, labor shortages and reduced production capacity due to the COVID-19 pandemic has disrupted the global supply chain, leading to higher freight costs and longer delivery times.

 

Many companies are coping with supply chain disruptions by delaying projects, switching suppliers or raising prices for their products, said Chad Wilkerson, branch executive of the Kansas City Federal Reserve’s Oklahoma City branch office.

 

“Increasing inventories isn’t very far behind that,” he said. “With things in short supply, firms have been holding higher inventories of raw materials more than usual. That has meant less supply — or more supply needed — across the world than in the past and helping, perhaps, particular firms but exacerbating the overall supply issue.”

 

The Federal Reserve monitors supply chain slowdowns because they affect price stability and maximum sustainable unemployment, two factors that the Fed considers when setting national monetary policy.

 

Wilkerson said even if supply chains were functioning properly, the amount of demand for merchandise has required companies to produce and ship more products. He said that has kept the economy from functioning at pre-pandemic levels.

 

Wilkerson said consumer demand should begin to diminish over time as people begin spending more money on services and less money on products. He said federal efforts to stimulate the economy will also decline over time, which will help reduce demand for products.

 

“So, the pressures from the demand side itself seem likely to ease, but again, that won’t be next month,” Wilkerson said. “That will be a gradual easing.”

 

The price of forks

 

Hossein Moini, whose company owns the Charley’s Cheesesteaks and Cinnabon stores in Central Plaza, said supply chain disruptions have led suppliers to raise their prices on everyday items like tableware.

 

“Before all of these issues, we used to buy 1,000 plastic forks for $27,” he said. “Yesterday, I looked at the bill and it’s $72.”

 

Moini, who is part owner of the Laugh Out Loud amusement center with Kennedy, said supply chain problems have also affected food prices.

 

“We supply pizzas for the birthday parties over there,” he said. “I just looked at the list: Cheese has gone up 8%. Dough balls have gone up 15%. Pepperoni, 18%. Sausage, 15%. Soda, 10%.”