Many companies are changing strategies to plan for long-term stressors.
A large number of companies pointed to supply-chain constraints as a pressure on earnings. There are growing signs that issues such as port congestion, difficulty getting truckers, slow supplier speeds and rising costs of components such as raw materials and semiconductors are affecting the broader economy.
Companies including Clorox Co.
, Majestic Steel USA, water heater manufacturer AO Smith Corporation
and apparel retailer Under Armor Inc.
We are making changes to operations and sourcing that will remove existing bottlenecks, indicating that stopgap measures responding to raw material shortages and transportation logjams are being embedded in ongoing operations.
“We expect supply chain constraints to remain in the market until the second half of calendar year 2022,” Tarek A. Robatiti, head of finance at information technology company Hewlett Packard Enterprise Co., said. Said at an October 28 analyst meeting.
Under Armor says it has narrowed its Spring and Summer 2022 order books. “We are taking precautions to navigate some volatility and projected business disruptions in the first half of 2022,” Under Armour’s chief financial officer David Bergman said during an earnings call on Tuesday.
Consumer-goods suppliers are trimming product lines and expanding their sources of raw materials to ease manufacturing and keep goods moving. Large industrial manufacturers are resetting assembly lines to make them more resistant to outages affecting the automotive sector, where many companies say they now expect semiconductor shortages to hit their production in 2022. We do.
ford motor Co.
During Monday’s investor meeting, its chief product platform and operations officer, Hou Thai-Tang, said it has “very high interchangeability, designing for modularity” and multiple sources for components.
Logistics experts say the interconnected nature of supply chains means there is no quick fix to resume a steady flow of goods through the global economy.
“We are not seeing any relief until the end of the 2022 calendar year,” said Sarah Banks, global lead for freight and logistics at consulting firm Accenture Plc. “But ongoing issues in supply chains raise the question of whether this is still possible. There are some positive signs, but it is still a guess as to how long we will be in this situation. “
She said easing supply-chain hassles would depend at least in part on addressing the impact of Covid-19 on the economy and operations from factories to port.
“There are big economic questions that determine supply and demand,” Ms Banks said. “Only until it becomes clear how we live our lives with COVID will we know what it looks like for supply chains,” she said.
Lisa Elram, a professor of supply chain management at the Miami University Farmer School of Business in Oxford, Ohio, said supply chain operations could be near normal by the fall of next year. But given the continuing prospect of shutdowns and other pandemic impacts, she said, “I think Covid is the big wild card.”
Supply chain operators say that until there are enough workers to operate trucks, ports and warehouses, congestion will continue.
“I won’t try to predict when and how this will end, but I’m confident it’s going to last long enough,” said Bob Bisterfeld, chief executive officer of CH Robinson Worldwide Inc., America’s largest freight broker. The company’s third quarter earnings call last week.
Lydia O’Neal at [email protected]