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The Closed Loop

By July 12, 2021Industry News

Mathematicians, economists, and techies all have a different use and definition for this term. We’ll steal it for what’s happening with the higher cost of goods and food and this moment.  The global pandemic threw businesses around the world totally out of balance. If you happened to own Amazon or stock in Zoom that wasn’t such a catastrophe. But for most businesses the shutting down of operations created havoc throughout the supply chain, and that led to scarcities and delays that became even more exaggerated as COVID restrictions began to lift.  Scaling back up will take time, and in the short run, prices will continue to rise according to the law of supply and demand.


At present, the manufacturer who makes packaging may not be able to source raw material or machine parts, or if available must pay a premium.  A producer of food products can’t obtain his standard packaging.  If he does locate packaging, now at a higher price, he finds out that transportation costs have risen drastically due to a higher demand for ships, shipping containers and road transport.  The business buying his product now must pay more, and so charges his customers a higher price. The consumers feel the pinch, and see their salaries as inadequate, so they demand higher wages.  Hopefully, the supply issue from where this sequence started with the workers who produce the food and raw material, provides them a higher wage too.  And now that the loop is complete, it looks like we’ve just described a virtuous cycle of inflation.

Ultimately though prices should smooth out as production again meets demand.  We know this has been a tiring explanation of why you feel like we’re sticking it to you on price increases. Please recognize that we really have little control when price becomes the key factor, except to offer what we think may be less costly alternatives of an acceptable quality. We’re competent at that.



July, 2021