Supply chain disruptions and rising prices for raw materials and inputs due to the COVID-19 pandemic are affecting many large manufacturing companies. Seven out of ten companies are experiencing negative effects on their operations, and just as many plan to raise their sales prices, according to a survey conducted in June in conjunction with the PMI Purchasing Managers’ Index.
Virtually all of the 200 major manufacturing companies included in the Purchasing Managers’ Index report that delivery times from their suppliers have lengthened. At the same time, rising prices for raw materials and inputs have increased the need to raise selling prices, a move that seven out of ten companies plan to make.
“Never before in the nearly 30-year history of the Purchasing Managers’ Index have we seen such a large proportion of companies reporting higher input prices. This applies to everything from steel, plastics, rubber, corrugated cardboard, and solvents to transportation services,” says Jörgen Kennemar, senior analyst at Swedbank.
Seventy percent of the companies surveyed report that supply disruptions are having a negative impact on their operations. As a result, 16 percent of the companies have scaled back their production plans for the next six months.
“Most companies have not yet changed their production plans, but the risk that more will scale back their production plans is increasing if the shortage of raw materials and inputs persists or worsens,” says Jörgen Kennemar.
During the COVID-19 pandemic, several supply chain disruptions have occurred, such as a shortage of containers and the closure of Chinese ports. This has led to longer delivery times and made it even more important to review and secure the company’s procurement.
– Continuously reviewing and securing procurement remains important for addressing climate challenges. Greater geographic proximity to suppliers to reduce transportation distances, having multiple alternative suppliers to reduce vulnerability to supply disruptions, using alternative raw materials and inputs in production, and streamlining the production process are areas that companies can examine to secure supplies and reduce their environmental impact.
