- KfW now has the results published in a survey of small and medium-sized companies.
- The biggest problems with delivery bottlenecks exist in the manufacturing and construction industries.
- The negative consequences are higher procurement costs, production disruptions and price adjustments.
Almost every second of the approximately 3.8 million small and medium-sized enterprises in Germany is currently struggling with the consequences of delivery problems, as a special survey carried out by KfW Research in September as part of the KfW SME Panel shows. Medium-sized manufacturing is particularly hard hit – four out of five companies (78 percent) complain about delivery bottlenecks.
The effects on the construction industry are no less severe, where 78 percent of companies have to deal with material shortages. In wholesaling and retailing, the proportion of medium-sized companies affected is slightly lower at 63 percent. And even in the service sector, which is fundamentally less dependent on intermediate inputs, around four out of ten small and medium-sized companies are still confronted with delivery bottlenecks.
Delivery bottlenecks: Manufacturers have scaled back capacities
The fact that medium-sized businesses are broadly affected is due not least to the fact that a large number of materials and intermediate products are currently not available in the required quantities. Difficulties are not only encountered with microprocessors, simple control elements are also missing, as are steel, aluminum, copper and other metals, plastics and packaging materials or wood for the construction and furniture industries. A major reason is that many companies reduced their capacities during the Corona crisis and are now only able to react slowly to the resurgent demand. Other causes such as disruptions in international freight traffic, the ongoing trade conflicts or individual events such as the forest fires in California also play a role.
Delivery bottlenecks: effects on medium-sized companies
Most often, small and medium-sized companies experience an increased workload in procurement (29 percent). Impairments in production or the provision of services due to a lack of raw materials or preliminary products occur in around every fourth medium-sized company (28 percent). The manufacturing sector suffers the most from this (56 percent). Every fourth company (26 percent) feels compelled to adjust the prices of its own products or services as a result of increased prices for raw materials and intermediate products. The most common price increases are in the construction industry (61 percent).
Sectors affected by delivery bottlenecks
Around 25 percent of all medium-sized companies are currently in default of delivery to their customers due to the bottlenecks. Every tenth medium-sized company even has to refuse orders because the required material is missing. This is a problem in particular in the construction industry, which includes craft businesses from window manufacturers to roofers (21 percent).
So far, the supply bottlenecks have primarily led to cuts in employment in the manufacturing sector. Almost every tenth company has reduced its employment, at least temporarily, by cutting overtime, vacation or even the instrument of short-time work.
Medium-sized companies do not expect the delivery bottlenecks to be resolved quickly. Only 5 percent of the small and medium-sized companies affected expect the situation to ease by the end of 2021. The majority expect the difficulties to persist for half a year to a full year. Almost every fifth company is even convinced that the situation will not normalize for another year at the earliest.
Delivery bottlenecks slow down the economic upturn
“The delivery bottlenecks are putting enormous obstacles in the way of small and medium-sized companies on their way out of the Corona crisis,” says Dr. Fritzi Köhler-Geib, Chief Economist at KfW. “They place the greatest burden on the manufacturing and construction industries, but retailers and service providers also suffer. That will take the momentum out of the economy that has just picked up again. ”Economic growth should flatten out in the next few months, but it will continue to be positive. “It will take some time before the delivery bottlenecks are resolved. However, I assume that the shortage of materials will at least ease somewhat over the coming months. Catch-up effects can then provide an impetus for a new growth surge in the coming year, ”said Köhler-Geib.
About the methodology of the study: The actual Survey on the subject of delivery bottlenecks is based on the KfW SME Panel, a representative and repeated survey of small and medium-sized companies in Germany. The population of the KfW SME Panel includes all private companies from all branches of the economy whose annual turnover does not exceed EUR 500 million. The special survey was carried out from September 1 to 10, 2021 by GfK SE, Financial Services division, on behalf of KfW Bankengruppe. In total, responses from around 2,400 companies were taken into account. Due to the connection to the basic data set of the KfW SME Panel, the results of the special survey provide a representative picture of the current impact of delivery bottlenecks.
Supply chain system depends on availability of raw materials
Christian Zöhrlaut, Director Products Medium Segment at Sage, comments on the results of the survey: “The current figures from the special survey by KfW Research as part of the KfW SME Panel show impressively how severely German SMEs are also affected by the ongoing supply bottlenecks for raw materials and parts and components is. This not only shows how fragile the global supply chain system and the underlying trade relationships are. This also makes it clear that the availability of raw materials – due to climate change – will increasingly be determined by individual climatic events. For example, forest fires, the duration and extent of which seem to be increasing from year to year, will permanently change the availability of wood as a raw material. ”
“In this context, from our point of view, it will become more and more important that companies anticipate natural events in particular as early as possible and derive their effects on their supply chains and the availability of raw materials from existing data. This is made possible by the fact that ERP systems integrate external data and evaluate it for the existing operating processes of a company. Supported by appropriately intelligent algorithms, potential frictions in supply chains and raw material availability can be predicted, for example by analyzing current weather data.
This means that on this basis, companies know exactly when and where the next wave of forest fires can be expected and how this will affect the availability of the raw material wood. As a result, dispatchers can adjust their purchasing and inventory processes for wood products accordingly and thus avoid delivery bottlenecks as well as possible and avoid raw material shortages in the warehouse as much as possible. “(Sg)
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