As we move forward with supply chain, keeping it efficient and free from disruption becomes increasingly important. Recently, businesses have taken it upon themselves to understand the market and what factors are impacting their supply chain so that they can find new ways to mitigate these disruptions.
Since the start of the pandemic, manufacturers have had difficulty keeping up with increasing demands and the ability to push out product. As the supply chain moves forward, demand still increases while new product such as cars, machinery, and technology the require new parts take over the market. As technology advances, older machines will require newer and more updated parts that will need more attention from your business in order to stay up to date.
High Labor Costs
With inflation and supply chain disruptions, labor costs have also increased significantly. One way businesses are working diligently to get their supply chain back on track is by attempting to fill any open positions by increasing wages in order to attract potential talent. Inflation has made it difficult for companies to keep a low turnover rate as people are seeking out higher paying opportunities.
Rapid Technology Transitions
As the supply chain becomes more complex, you may begin to rethink your in-house technology and how it is beneficial to your processes. Between labor constraints, supply chain disruptions, and material shortages businesses have adopted new technologies to get through these trying times. Although implementing new technologies can be beneficial to your company, there are still risks that come with such a rapid transition. For example, advanced technology may only be designed for certain parts of your process and leaves room for error when training employees or keeping these programs safe from things such as malware.
Necessary components for production have been scarce due to the pandemic and has created lead times for certain products as long as 60 weeks. These constraints and lack of product have caused significant impacts such as smaller profit margins, price increases, and delays in product delivery. As a response to these supply constraints, suppliers have begun investing in newer technologies, ultimately no longer relying on legacy components as older technologies get discontinued.
There are several factors that are driving up the prices of raw materials such as labor constraints, lack of product, and inflation. When prices are increasing, this can affect your supply chain significantly as you will have to not only purchase raw materials from suppliers at a greater price but will also have to increase prices to your customers so that your business is able to profit.
The supply chain can be complex and as a business owner it is important to understand what market forces are creating complexity for you so that you can make the best decisions to benefit your company. As a reputable company that specializes in supply chain management, our NewStream team is equipped with the knowledge and expertise to help you mitigate these ever changing market forces once and for all.
Ready to put your supply chain ahead? Let’s chat, our experts are ready to help!