For the past year, we have written a lot about supply chain disruptions. If anything, they are worse today than before. We see shortages of staples. Cargo ships backed up at the Port of Los Angeles. Goods stuck overseas. And more. Here, we examine prices and supply chain disruptions.
Before reading below, check out these related posts:
- H-U-G-E Changes in the Auto Industry Supply Chain
- 2021 Tips for Supply Chain Management
- Handling Supply Chain Disruptions
The Interaction of Prices and Supply Chain Disruptions
Already, we have witnessed some rising prices. U.S. inflation is at 5+ percent. Food products and autos (both new and used) are undergoing large price increases.. Now, more product categories are getting higher prices.
Proctor & Gamble (P&G) represents an example of a huge global company enacting price increases. According to Sharon Terlep, reporting for the Wall Street Journal:
From furniture makers to grocers, the world’s biggest companies use their deep pockets, sprawling global operations, and commanding market share to insulate themselves from the global supply-chain meltdown. They also flex their pricing power, taking advantage of consumers’ willingness to pay up for higher-end products.
P&G, maker of Tide detergent and Crest toothpaste, said Tuesday it will start charging more for razors and certain beauty and oral care products, price increases that come in addition to earlier moves to start charging more for staples from diapers to toilet paper. The company said its sales and profit goals for the year remain intact, as it has managed to keep products in stock. “To the consumer, it looks like we’re in good supply,” P&G Finance Chief Andre Schulten said in an interview.
P&G executives say the company’s scale, ability to spend on supply-chain fixes, and flexible operations enable it to keep products in stock even as consumers increasingly encounter sparse shelves at stores. In China, for instance, P&G moved production to other factories when some provinces limited plants’ power usage in recent weeks as part of a national effort to limit energy consumption. P&G said it also started enlisting backup suppliers, changing shipping routes to get around bottlenecks.