Consumers are set to bear the brunt of ongoing global supply chain disruption, with more than a third of businesses planning to increase prices to offset costs in the next six months, according to recent research from London-based researcher BSI.
The BSI study, which is based on information from professionals involved in supply chain risk management, found that recent supply chain shocks are directly affecting end consumers. To mitigate against potential or ongoing disruptions over the next six months, more than a third (36%) said their business plans to increase prices. What’s more, the study found that shoppers will face reduced choices and longer wait times for goods, “meaning they could struggle to get hold of everything from consumer electronics to medicines,” the researchers said.
The data shows that a quarter (24%) of U.S. companies plan to reduce the range of products or SKUs (stock-keeping units) on offer in the next six months, while 68% are already pausing new orders altogether. The majority (81%) said they are currently or about to warn customers about shortages, delays, or dependency risks.
BSI researchers said the challenges are being exacerbated by a lack of preparedness for what they describe as “a new normal of near-constant disruption,” due to geopolitical turmoil, climate, and weather-related incidents and digital transformation.
During the last six months, for example, less than a third (30%) of organizations said they were fully prepared for raw material or component shortages, including scarcity of critical inputs, according to the report. This is despite half (49%) having experienced supply chain disruption previously due to geopolitical events, with the same number (50%) having seen issues arise in this period due to raw material or component shortages.
Contingency planning
The data shows how businesses are planning to respond to disruption, with almost four in five (81%) currently or imminently stockpiling or building strategic inventory buffers, and nearly the same proportion (78%) currently or considering nearshoring their supply chain in the next 12 months. With key shipping routes disrupted and high levels of freight theft, 79% are already or planning to change modes of transporting products.
Looking at immediate action, in the next six months, more than a third (37%) expect to find new suppliers, and more than a fourth (28%) expect to shift trade routes. One in five also said they expect to cut jobs or reduce recruitment due to supply chain pressures.
“The era of predictable global trade that defined the last three decades is behind us. Today’s supply chains operate in a world shaped by geopolitical competition, climate disruption, and increasing uncertainty,” Tony Pelli, practice director, supply chain resilience, at BSI, said in a statement announcing the findings. “Businesses are facing a new normal of near-constant disruption, and we are likely to see no letup in the coming months and years. As our research shows, this is not just a concern for those managing operations; we are expecting it to directly impact consumers in the coming months. Whether it will be empty shelves, higher prices or delays to receiving orders, impacts are likely to trickle down to the public as businesses battle one disruption after another. For business leaders, building resilience requires stronger collaboration, improved visibility across supply chains, and more proactive approaches to managing risk.”
