The article points out that many manufacturers base decisions not on real consumer demand, but on "what's trending on short-form video platforms, what platforms are promoting, what others are selling." These signals themselves aren't bad; the problem is treating them as the only decision basis, rather than as one reference point among many.
To judge whether you're following false signals, ask yourself several questions: Behind this decision to produce or source this product, is there specific demand from existing customers, or is it just "feels like this is trending"? If this product's platform traffic disappeared tomorrow, would the decision still hold? Are your inventory planning and capacity allocation based on which specific customers' which specific orders, or on a vague "market demand" forecast?
If you can't answer all three questions clearly, you're making decisions based on market sentiment rather than market demand. Overcapacity is just a matter of time.