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Read the full article on Industrial Distribution.
Is prolonged inflation on the horizon? Costs are undoubtedly rising, with global economic experts closely monitoring developments and pundits making predictions. Inflation has an obvious impact on consumers, but the upstream effect on distributors is just as profound.
Resurgent demand post-pandemic, coupled with many companies’ significant challenges to acquire raw materials to manufacture products or goods to stock distribution centers, has led to a “perfect storm” that is causing prices to soar on everything from diapers to steel. Acting swiftly has never been more important. Yet, many companies are utilizing spreadsheets and other manual tools in an attempt to respond with price increases for this critical task.
While we hit a 13-year high in the consumer price index inflation rate (5 percent) in mid-June, so far, the federal government and Wall Street generally agree the situation is temporary. That’s cold comfort to any business currently scrambling to source steel, iron, lumber, cotton, copper, and any number of other materials that are trading at a premium price. Distributors who have been less than intentional and data-driven in their pricing approach risk letting this (hopefully) short-term crisis put them at a long-term strategic disadvantage.
The average B2B company struggles to keep up with cost changes even under more “normal” economic times. According to Zilliant’s Global B2B Industry Benchmark Report, B2B companies lose nearly 9 percent of available margin annually due to inefficient and misaligned market pricing, largely caused by slow, overly broad, and inefficient processes to increase prices when costs rise.