Since the beginning of 2020, supply chains around the world have also become increasingly unstable and vulnerable, according to Reichelt Elektronik. The supply of essential components such as chips or even individual raw materials has begun to falter and German companies are suffering the consequences. Audi recently had to put 10,000 workers back on short-time working, not because Covid-19 is forcing them to do so, but because important chips are missing from production.

A survey commissioned by Reichelt Elektronik shows what effects supply bottlenecks have on German companies and how they are nevertheless defying the crisis.

Average production downtime of 35 days

95% of respondents confirm that their company has experienced production stoppages due to supply bottlenecks since the start of 2020. Reasons include late deliveries or missing components. A large proportion of the companies affected (41%) even had to accept a production stoppage of more than a month.

Every day that machines are idle costs companies immense sums of money. Small companies with up to 50 employees had to contend with an average loss of just under 100,000 euros, while medium-sized companies (50-250 employees) have already had to compensate for a loss of turnover of just over half a million euros. Across all sizes, the survey revealed that the German companies surveyed have recorded average losses of 924,000 euros since January 2020. Almost a third have lost at least 500,000 euros in turnover.

In addition, production experienced further negative consequences of the crisis-ridden supply chain. 39% confirmed that prices for certain components increased significantly. A third (33%) stated that although production did not have to be shut down, significant delays were to be expected. Another 33 percent of the companies surveyed had to put their employees on short-time working, while a fifth (20 percent) were even forced to lay off workers.

No hope of rapid improvements

Almost 60% hope that the situation on the market will ease in the next 12 months. By contrast, 30 percent see no glimmer of hope on the horizon and expect nothing to change within a year. The main factors that could continue to put pressure on the supply of components and materials are the shortage of sought-after raw materials (44%), increasing demand for certain components (37%) and the possibility of more pandemics occurring in the future (36%).

As a result, many companies have been looking closely at options and ways through the crisis. Distributors are a particularly reliable source of supply. Half (50 percent) of the decision-makers surveyed stated that their company now uses distributors as suppliers for components and goods to ensure a smooth production process. Other measures to contain the crisis include holding more stock of the relevant parts (44%) and purchasing directly from the manufacturer (35%). More than a fifth (22%) have even switched to producing critical components themselves.

Politics is also needed for sustainable solutions

In order to be well prepared for future supply bottlenecks, companies are aiming to build up more stocks (41%) and source more components locally (36%). A further 34% even want to adjust their product portfolio.

However, companies are also limited in their sphere of influence. According to Reichelt Elektronik, it is also the responsibility of the German government to strengthen the German economy and make it more crisis-resistant. For example, 38% of the companies surveyed would like politicians to provide more funding and support for research into future technologies and the production of essential components. On trade issues, over a third (36%) see a need for more cohesion in the EU vis-à-vis other trading partners.

Survey:
The figures were collected by the international survey institute OnePoll for Reichelt Elektronik and include 1,900 participants from Europe, 500 of them from Germany.