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Chicago Survey: Firms to Reduce Inventories By Cutting Supply Orders

MNI (London)

Slowing demand alongside easing supply chain pressures is lowering firms' required inventory levels. In September, the NY Fed global supply chain pressures index softened to the lowest pressures since November 2020.

  • Inventory carry costs (ICC) were largely overlooked during the pandemic as concerns regarding the inability to meet demand due to high supply uncertainties outweighed.
  • Profit margins are now feeling the squeeze of widespread price growth and high inventory levels carry the opportunity cost of foregone savings and investment.
  • Against this background, this month's special question asked firms how they are looking to move excess inventory.
  • Cutting back on orders from suppliers was the most heavily implemented strategy (33.3%). This was followed by strategies involving repurposing, reselling, reducing prices and waiting saw relatively even usage by around 13-17% of firms.
  • 36.7% were not experiencing inventory level issues.

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