Rising energy costs put more burden on supply chain managers

Senior manufacturing executives believe that rising energy costs will change the way they conduct their business and guess who they expect to minimize the pain? That’s right – supply chain managers. The increasing burden of energy costs is forcing organizations to rethink not only their distribution plans, but also their operating strategies for contract manufacturing. These findings come from a survey of over 60 corporate executives from a range of industrial companies about the impact of energy on their business conducted by analyst firm Industry Directions Inc.

Over three-quarters (77%) of the executives surveyed indicate that they are increasingly focused on supply chain issues as a result of the rapid changes in energy markets. “The rising cost of energy is forcing companies to rethink their longer term operational strategies, including revamping their supply chain network design,” says William Brandel, principal at Industry Directions. “Further, nearly half of all companies now say they are re-considering whether and how to implement offshore manufacturing, once seen as a panacea for controlling costs.”

The survey also indicates differences in the way process and discrete manufacturers are responding to the rising costs. Although both sectors rank logistics and sourcing as their top areas of concern, process manufacturers -- whose production processes are more energy-intensive and whose feed stocks are often petroleum-based -- are also concerned about forecasting, production and inventory management.


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