higher costs

Studies show that the current supply chain crisis could cost businesses up to 45% of their annual revenue over the course of 10 years. Some of these losses are due to higher material and operational costs.

First, the increased demand for certain supplies, such as the semiconductors mentioned above, combined with ongoing inflation concerns has fueled a spike in material costs. While manufacturers can pass some of these added expenses on to the consumer, there is a real danger of outpricing their target customer.

Secondly, longer production times along with increased wages are also increasing the total cost of production. The manufacturing industry saw a salary increase of 6% in 2021. While this might not sound like a lot, at a time when companies are trying to control costs, any type of wage increase is difficult to manage.

Finally, the Russian-Ukraine conflict has led to higher costs at the gas pump. For manufacturers, this increase in petrol costs means higher transport costs for goods and materials coming in and out of the plant.

reduced customer satisfaction

A recent study revealed that 57% of consumers have been personally impacted by the supply chain shortage. This study also shows that 52% of consumers plan to refrain from purchasing goods that are shipped from overseas, and 36% would look elsewhere if it will take more than two days to receive their goods.

This is troubling news for manufacturers who are still struggling with multiple supply chain disruptions. The inability to provide consumers with the products they want in a timely manner could cause them to lose customers. Manufacturers who are unable to mitigate the impact of the current supply chain crisis are at a real risk of losing their businesses.

what steps are manufacturers taking to overcome this challenge?

Manufacturers who hope to remain competitive in the years to come must take steps now to improve their supply chain efficiencies. Here’s a quick glance at some steps manufacturers are taking to overcome these challenges.

upgrade supply chain technology

Excel spreadsheets are no longer an effective way to manage supply chain processes. The reality is that these supply chain networks and consumer demands have become too complex to be managed manually. In fact, studies show that the most successful companies were 2.5 times more likely to invest in supply chain technology and advanced analytics. Companies that want to survive in today’s market should strongly consider upgrading their current supply chain processes to include advanced technology.

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