Supply Chain Constraints & COVID Recovery

During Q2 2021 earnings calls, many executives stated that their companies are experiencing increases in demand coupled with rising material costs, labor shortages, and transport constraints. Please click here for a complimentary copy of our Supply Chain Constraints & COVID Recovery Report. Please contact us if you feel you need assistance with supply risk mitigation. Our approach is to review the value chain for risks and bottlenecks, identify cost drivers, and to work with suppliers to ensure that any cost increases are justified by underlying conditions.

  • Management Commentary - There is a cross-industry consensus that strong demand and constrained supply is driving inflation throughout the value chain.

  • Evolving Situation - 2020 earnings calls focused on cash preservation, market concerns, and COVID-19 shutdowns; while Q2 2021 calls generally had a strong focus on increased demand, limited supply, and growth.

  • Commodity Developments - Most commodities have increased significantly since their lockdown-induced dips.

  • Transport - Driven by increased demand and a severe container imbalance, the Shanghai Containerized Freight Index has increased 4x since the pandemic began, while Air Freight has also experienced dramatic increases, especially between Asia and North America.

  • Labor - After an unprecedented number of firings in early 2020, layoffs and quits have returned to relatively normal levels while the number of job openings, especially in Manufacturing, have greatly increased.

  • Negotiations & Mitigation - A systematic approach will ensure cost increases are mitigated and savings opportunities are identified, tracked and achieved in a timely manner. A detailed follow-up process will be needed to ensure any price increases are modified as market conditions improve.

Please click here for a complimentary copy of our report.