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Goldman Sachs Sees More Overstocking Than Reshoring by U.S. Firms

Employees pack customers’ orders at a Ztore Hong Kong Ltd. fulfillment center in Hong Kong on Monday, March 11.

Employees pack customers’ orders at a Ztore Hong Kong Ltd. fulfillment center in Hong Kong on Monday, March 11.

Photographer: Paul Yeung/Bloomberg

Two years of supply shocks have made efforts to strengthen supply chain resilience top-of-mind for manufacturers and retailers. Economists at Goldman Sachs see three main solutions for those in the U.S.: reshoring foreign production, diversifying supplier networks and overstocking inventories.

Overstocking, or targeting a permanently higher level of inventories, is the strategy that’s most clearly underway, especially in durable goods, the economists said in a recent report. Companies analyzed by Goldman Sachs are aiming for inventory-to-sales ratios roughly 5% higher than before the pandemic on average, according to the report.