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Freight bottlenecks, inflation, supply chain shortages, labor constraints and geopolitical events continue to plague many manufacturers and distributors right now, but according to one new survey the overall sentiment for the group is largely positive.
In February and March, professional services organization Sikich LLC surveyed about 100 manufacturing and distribution executives for their take on the current supply chain disruptions, workforce requirements, facility plans and other relevant topics. It published the results in the Sikich Industry Pulse, which revealed an overall optimism as we head into the summer months.
In February 2022, Sickish says 75% of manufacturing and distribution executives rated their optimism at a seven or higher (on a scale of one to 10), which is 3% higher than February 2021 and 4% higher than September of 2021.
When the group was surveyed on optimism again in March, Sikich learned that manufacturers have remained optimistic. For example, nearly 70% of manufacturers still rated their optimism of business prospects over the next six months at a seven or higher. “This optimism may be impacted as geopolitical conflicts continue to unfold,” the firm points out.
Finding Alternate Sources of Supply
Acknowledging that the global pandemic led to material shortages and delays, and that now geopolitical conflicts may prolong and exacerbate supply chain challenges, Sikich says industry executives are taking (or, plan to take), the following steps to mitigate the supply chain disruptions.
- Identify alternative supplies - 33%
- Identify alternative products - 21%
- Reevaluate logistics providers - 17%
- Change purchase position - 14%
- Increase warehouse space - 8%
- Invest in technology for further supply chain visibility - 5%
- ·Use centralized vs. decentralized purchases - 2%
Sikich says 70% of respondents are taking two or more of these steps, and that 45% of all respondents are identifying alternative supplies and alternative products right now.
“I’m pleased to see manufacturers’ optimism remain strong, even amid the plethora of challenges they are facing,” Sikich’s Jerry Murphy said in a press release. “With the pandemic, supply chain disruptions and geopolitical turmoil continuing to cast a shadow over the industry, manufacturers should focus on strengthening key parts of their operations to reduce their vulnerability to these external challenges.”
Becoming an Employer of Choice
Manufacturers and distributors are also dealing with a labor shortage, with 25% of them focused on maintaining their current workforces. The survey says 75% of manufacturers want to increase their workforce in the next 12 months, with 21% of these manufacturers planning a significant increase. Ten percent are very confident in their ability to obtain the talent required – an increase in confidence compared to the first quarter of 2021, in which just 5% expressed this level of confidence.
Sikich points to educational assistance programs (EAPs) as one strategy that employers can use to stand out in this labor-constrained business environment.
“While student loan payments were paused during the pandemic, they are likely to resume in 2022,” it points out. “Incorporating an EAP and offering student loan repayment assistance on a tax-free basis to employees, can aid in this effort.” Currently, just 4% of Sikich’s survey respondents have, or plan to offer, this.
Planning Ahead
The Sikich survey also looked at manufacturers’ and distributors’ expansion and growth plans for the year, and found that those gearing up for facility updates in 2022 are planning to:
- Upgrade to existing facilities - 69%
- Expand existing facilities - 22%
- Move to a new, existing facility - 6%
- Build a new facility within the US - 4%
Manufacturers and distributors are also participating in corporate responsibility initiatives like:
- Generous labor policies, such as more than two weeks paid time off, improved working conditions, enhanced healthcare options, etc. (54%)
- Eco-friendly practices such as automation, going paperless, efficient facility upgrades, recycling, using sustainable materials, etc. (44%)
- Commitment to diversity, equity, and inclusion (DEI) (30%)
Sikich surveys manufacturers and distributors year-round on a range of business topics to create industry benchmark data. For this report, in February and March, Sikich surveyed more than 100 executives from manufacturing and distribution companies across sectors including industrial equipment, wholesale and distribution, metal fabrication, food and beverage, apparel, footwear and textiles, and transportation.
