Exec summary@2x

Scarcity is real.

A full 98% of respondents are experiencing shortages of some kind, with 78% of them reporting either a major or a moderate impact on their business. And these shortages are not going away soon: Only 2% of those responding thought that shortages would come to an end before mid-2022. The other 98% were evenly split between believing it would last for six months to a year and one to three years.

Skilled labor is at the core.

The survey asked respondents what kind of shortages they were experiencing, ranging from raw materials to management talent to truck drivers. The only factor that every industry reported experiencing scarcity in was skilled labor, with 76% of all respondents saying it was having a moderate or a major impact on operations.

People are leaving.

The “Great Resignation” is having real impact. Some 71% of respondents said that increased turnover has affected their business—indicating that it may be the biggest legacy of the crisis.

Inflation is hitting hard.

A full 90% of respondents said they are increasing compensation either “a little” or “a lot”—with 78% saying the same about pricing. At the time of writing, inflation is at 7% in the U.S., its highest level since 1982, according to data from the U.S. Bureau of Labor Statistics. Meanwhile, across the eurozone, inflation stands at 5%, according to Eurostat.

Automation is one result.

The increased pressure to raise prices and boost wages is leading many companies to accelerate automation, something that is politically challenging but economically necessary—according to many leaders—as wages continue to soar. Overall, 86% of respondents indicated they are investing in automation in response to the crisis, with 41% investing “a lot.”

The customer impact has yet to be grasped.

Apart from increased employee turnover, four of the top five business impacts relate directly to customers. These impacts include longer lead times (70%), and shortages of goods and services (64%). However, just 28% of respondents reported that shortages have damaged customer relationships so far, suggesting that not all of the fallout has been realized.

The bigger have it better.

The survey data indicates that shortages have a larger impact on relatively smaller companies. Nearly one-third of leaders at organizations with revenues of less than US$10 billion reported facing major impacts, on average, compared with just 16% of those at organizations with revenues in excess of US$50 billion.

Supply chains have moved from just-in-time to just-in-case.

The pandemic accelerated the shift in supply chain priorities from extreme cost efficiency and lean operations to duplication and stockpiling. Overall, 74% of respondents indicated they are increasing inventory levels in response to supply shortages, with 30% placing “a lot” of emphasis on this strategy.

Supplier relationships are top of mind.

The ongoing supply crunch has forced many companies to rethink the entire way they do business—starting with an admission that they may have focused too heavily on the customer at the expense of the two other key relationships: with employees and suppliers.

Sustainability has become an unanticipated choke point.

Many materials are less available, due to both climate change and increased regulations. That fact, coupled with changing customer preferences for more sustainable materials, means companies are struggling to meet demand.

Survey conducted November 18–December 15, 2021.

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