Nov. 2 - Price hikes or margin hits?

It's a question companies are facing as supply issues linger. But even if the inventory arrives, there may not be enough labor to fulfill it. View online | Sign up | Forward

Weekly edition | Nov.​ 2,​ 2021 Your Guide to Operations By Edwin Lopez   BROUGHT TO YOU BY — Supply Chain Dive's studioID The Next Generation of Manufacturing Operations The digital transformation of the factory floor presents manufacturers with all new ways to minimize downtime and lift production. Learn more in this playbook.   Companies are facing tough decisions as supply issues linger. But even if the inventory arrives, there may not be enough labor to fulfill it. (Was this email forwarded to you? Sign up here.) Price hikes or margin hits? That's the question retailers contend with as they consider the impact of supply chain disruptions on their inventory.  A recent survey of retail executives found nearly all respondents are facing supply chain issues. But companies are reacting in different ways. Some executives are passing price hikes to consumers, while others are choosing to take the margins hit. Read the details. STAT OF THE WEEK How much is a micro-fulfillment business worth? $1B The total valuation for Fabric, a micro-fulfillment start-up that has become popular among grocers, after it closed a $200 million series C funding round. Get the details. Hasbro notes the cost of lost sales The value of unfilled orders, or the opportunity cost of lost sales, has been a valuable metric for retailers in deciding whether to raise prices in 2021, and by how much. Several executives are turning to this metric to illustrate the impact of supply chain disruptions. In the latest example, Hasbro said it had lost $100 million in "unfulfilled orders" during Q3. And even though those orders were filled in Q4, it's a reason its teams are "working around the clock" to ensure goods arrive on time. Read more. But even if orders arrive, can they be fulfilled? It might depend on the availability of labor. It's no secret warehouses are suffering from a lack of workers, but the effect of this was evident in Amazon's latest earnings call.  Labor constraints forced Amazon to redirect packages to sufficiently-employed fulfillment centers in Q3, and that move had significant side effects. Shifts in inventory positions led to longer transit times and pricier routes in some cases, ultimately weighing on the company's margins. Here's the details. Opinion Poll             Which factor has MOST slowed your supply chain this quarter? Not enough workers at manufacturing facilities Limited transportation capacity Congestion at ports Labor shortages at warehouses and distribution centers Other — hit reply and tell us! Have a poll question you’d like to suggest? Let us know!   Last week's results are in! We asked: What steps has your company taken in the face of shortages?                     25% said they expanded their supplier base; 19% said they reformulated or redesigned products; 18% said they shifted marketing or sales plans; 21% said all of the above; and 17% said other.             Quick Hits Food Dive The food and beverage industry is investing in dozens of new U.S. manufacturing facilities. DC Velocity A surge in robots is shifting the job description for warehouse workers. Retail Dive Under Armour's CEO said most of the work needed to change its channel mix is now complete. The Wall Street Journal Companies are rethinking their marketing strategies as logistics issues threaten supplies. Reuters Manufacturing in China slowed in October, a sign of economic woes to come. Parting thought I'll be honest, I kind of geek out about KPIs. It's fascinating to see which metrics are the most helpful to supply chain managers when making business decisions. The cost of lost sales is one that's on my mind right now. Are there any others you've heard of recently? Let me know via email. Edwin Lopez Senior Editor, Supply Chain Dive Twitter | Email

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