The Edge for May 2022
Inflation is touching every business worldwide – and not for the better. We asked New Jersey business executives to tell us how their organizations are being impacted. Prices for supplies are high, they said. But it goes beyond that. Businesses are sometimes having trouble getting supplies at any price. Here is what they said:
It is Almost Impossible to Provide our Customers with Quotes
We have seen prices for stainless steel rise more in ten months than in the inflationary decade of the 1970’s. It has been almost impossible to provide our customers with quotes because the cost of components changes daily. We cannot build inventory because the supply chain is so broken that orders that once had a two- to three-month lead times now have six- to 12-month lead times. Sooner or later we’ll run out of every component because they are not being replenished.
– Jeff Scheininger, President, Flexline
We Spend a Lot of Time Sourcing Supplies that Were Once Easy to Get
Our cost of raw ingredients has gone up by 27% to 33% across the board for very basic items. And that is if you can even get them. We now spend a lot time sourcing supplies that we used to be able to buy readily. We are also finding that our cash flow is being negatively impacted as we are being forced to hold higher inventory at higher prices. We have not passed on the increases to our customers yet but we are concerned that we might have to. We see nothing to suggest that high inflation will ease anytime soon.
– Geraldine Keogh, CEO, The Dessert Ladies/Biens Chocolate Centerpieces Corp.
It’s a Wheel that Keeps on Spinning
Companies don’t have the opportunity to get the supplies they need and if they don’t have the needed supplies, their revenues go down. Meanwhile, there is overhead to cover. So, if you keep your prices stable, can you survive with lower revenue? You have to adjust if you are going to survive – until the supply chain is under control. The other thing that aggravates matters is the Federal Reserve’s rate increases. It’s supposed to reduce inflation. But in the short term, companies that are borrowing money have to pay more. That places more pressure on their bottom lines. You can add in the labor shortage. If businesses have to reduce operating hours, it hits their bottom line negatively. It’s like a wheel that keeps on spinning.
– Tom Bracken, President & CEO, New Jersey Chamber of Commerce
