When will supply chain troubles really end? That’s an important question for retailers and manufacturers alike when devising capital spending, purchasing and manufacturing strategies for the coming year.
Comments from business executives at quarterly results events and interviews with logistics experts show that they expect supply chain disruptions to 2022, even more so. further.
Many companies believe that it is supply chain constraints that have negatively impacted profits. There are growing signs that more problems are affecting the economy at large. These include congestion at seaports, difficulty finding truck drivers, delays in deliveries from suppliers and rising costs of raw materials and components, such as semiconductors.
Companies such as Clorox, Majestic Steel USA, water heater maker AO Smith and clothing retailer Under Armor are making operational and supply changes to overcome current bottlenecks. This signals that the application of temporary measures to cope with material shortages and traffic congestion is being carried out in parallel with the current operations.
Tarek A. Robbiati, CFO of information technology company Hewlett Packard Enterprise, said: “We see supply chain tensions that will continue to persist in the market until the second half of 2022. calm down”.
Under Armor said it has limited orders for spring and summer 2022. David Bergman, the company’s chief financial officer, said: “We are taking precautions to prevent weather uncertainty and possible business disruption in the first half of 2022.”
Suppliers of consumer goods have cut many product lines to simplify production and maintain the flow of goods. They are also expanding the supply of raw materials. Many of the larger industrial manufacturers are resetting assembly lines to make them more resilient to outages. Several companies in the auto sector said they now expect chip shortages to affect production through 2022.
“Ford Motor is designing a lot of replacement parts and making sure the company has a diverse supply of parts,” said Hau Thai-Tang, head of product design and head of operations at the automaker. know.
Logistics experts say that due to the interconnected nature of supply chains, it is unlikely that a quick fix will be able to restore steady movement of goods in the global economy.
“We have been seeing no improvement until the end of 2022. There are some signs, though,” said Sarah Banks, Head of Freight and Logistics at consulting firm Accenture PLC. positive but it remains to be seen how long we will face this situation.”
According to Ms. Banks, solving supply chain difficulties will depend at least in part on addressing the impact of the Covid-19 pandemic on the economy and operations from factories to ports. .
“There are bigger economic questions affecting supply and demand,” she said. Only when we see clearly how we live with Covid-19 will we know what the supply chain will be.”
Lisa Ellram, a professor of supply chain management at the Miami University Farmer School of Business in Oxford, Ohio, thinks supply chain operations could be close to returning to normal by next fall.
Supply chain companies expect the bottlenecks to persist until there are enough workers for transportation, port and warehouse operations.
“I will not try to predict when and how this will end. I believe it will last for a while longer,” said Bob Biesterfeld, CEO of CH Robinson Worldwide.
Khai Tam (According to Wall Street Journal)