Report: The 20 industries most concerned about supply chain issues in 2022

Product delays and empty shelves threaten to continue as consumer tech and groceries top the list of industries most concerned about supply chain in 2022.

A new study, conducted by supply chain consultants at Avnet Silica, reviewed transcripts from 30,111 earnings calls -  where public companies discuss results from their most recent financial quarter - which took place between January 2018 and April 2022.

Key findings:

• Of the 20 sectors most focused on supply chain issues, more than half are reliant on electronic components for manufacturing, and more than a quarter are involved in the supply of food and groceries.
• For the first time in recent years, 100% of earnings calls discussed supply chain concerns in 12 different sectors.
• Inflation, supply chain and talent top the list of growing concerns for company executives and their investors, with inflation being the fastest growing topic on the earnings call agenda in 2022.
• COVID tops the list of decreasing concerns, and was discussed in 9% fewer earnings calls than  in 2021.
• Despite the decline in talk of the pandemic, supply chain concerns continue to grow, with the topic claiming airtime in 60% of earnings calls across all industries in 2022 compared with 47% in 2021.

For the first time in years, every company in 12 different sectors raised supply chain concerns in their quarterly earnings calls

As semiconductor shortages continue, supply chain issues were brought up on 100% of earnings calls in 12 different sectors this year, including automotive, electronic components, computer hardware and consumer tech.

Sectors heavily reliant on electronics manufacturing, make up more than half of the 20 sectors most focused on the supply chain at the boardroom level. And sectors involved in food production and distribution, from farming to groceries, make up more than a quarter of the companies most concerned about their supply.

Inflation, supply chain and talent are the 3 most pressing concerns for the world’s top companies

Supply chain was mentioned in 60% earnings calls across all industries in 2022, compared with 47% of the calls in 2021.

Inflation, the fastest growing topic on the executives’ agenda, was mentioned in 58% of calls this year, compared to 2021, when it was raised in just 38% of earnings calls between executives and their investors.

Supply chain focus continues despite passing pandemic concerns

“COVID” and the “pandemic” top the list of decreasing concerns for executives and investors in 2022, with both phrases appearing in 9% fewer earnings calls than they did in 2021.

Despite the pandemic, and its associated lockdowns dropping in priority at boardroom level, the proportion of earnings calls focusing on the supply chain has almost tripled since 2019, rising from 23% that year to 60% in 2022. Supply chain issues have been raised in almost 2 thirds of calls this year (60%), compared with just less than half (47%) in 2021.

Talk of the pandemic may be decreasing but supply chain concerns are the highest they’ve been in years. In 2022 supply chain concerns have taken up airtime on earnings calls across 12 entire industries.

Mat Ransom, supply chain consultant at Avnet Silica explains:

“It’s tempting to think that the pandemic was the cause of the supply chain shortages we’re witnessing today, especially in the electronics market. It certainly added a lot of pressure to the system, with ports and factories closing during lockdown.

However, if it was really all down to the pandemic and lockdowns companies would have largely recovered by now. But that is not the case.

The truth is the pandemic added stress to the system and exposed its vulnerabilities. For the most part though, shortages boil down to one thing; demand outstripping supply. There are more and more electronic components going into so many of our products these days, from our clothes to our cars. And the rate at which consumer demand grows is not as easily matched by growth in production of electronic components like semiconductors and microcontrollers.

To look at the automotive market for example, not so long ago there would be only 500 semiconductors in a new car but now a new electric vehicle with advanced driver assistance systems can contain up to 2,000. That’s a 4-fold increase in microchips going into a new car.

And that’s not being equally matched on the supply side, where we’re seeing an increase in annual capital investment in semiconductor production of approximately 15% over the next 4 years, across the major chip manufacturers.

It can be a slow process to ramp up production and supply of these essential components. There are several new semiconductor factories planned to come online in the next 5 to 6 years, but in the meantime, demand continues to grow.

We’re speaking to companies across a variety of industries, from automotive to consumer tech and more, who are taking action today to redesign their supply chain for as far out as 2026 and beyond so they’re better equipped to respond to disruptions in future.

For a lot of supply chain managers, the last couple of years have been the toughest of their professional lives. And many electronics manufacturers want to make sure they learn from the challenges of the pandemic and be more able to respond to change in the future.”

We know that each change a business makes to its supply chain comes with risk. And we know there’s no one size fits all. So, if you'd like expert support with your supply chain challenges, please get in touch. We'd love to see if we can help.

Sources:

Earnings call transcripts: The Motley Fool
Social media image: Unsplash

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