Businesses have faith in their resilience despite all the disruptions

Components shortages and supply chain chaos have become a fact of life in the Dutch manufacturing industry, with 83% of businesses still experiencing supply chain disruptions. Nevertheless, 88% are confident that their company is resilient, according to the new Supply Chain Report by Reichelt Elektronik, a German-based distributor of electronics and IT technology.

For the third consecutive year, 250 Dutch decision-makers from various industrial sectors were surveyed for the report in October. 45% of them are confident that the situation will improve in the future, which is less than in previous years. More than two-thirds were positive about the future in 2021, and that figure stood at 48% last year.

When it comes to the resilience of their own organization, 88% of the respondents express confidence, even though the majority (52%) indicate that their company has suffered significant losses in the past three years. Additionally, 59% are concerned about the potential economic risk to their company in the case of major shortages of certain components. 69% expect to be able to tackle supply chain problems by implementing a reliable system.

Successful measures

Manufacturing activities in the Netherlands regularly grind to a halt due to materials shortages or delayed – or even cancelled – deliveries. Despite this, the latest survey results show an improvement over previous years. The average production downtime has fallen from 38 days in 2021 and 47 days in 2022 to just 30 days in 2023. In fact, 19% of those surveyed have had no production downtime at all. This illustrates the success of the measures taken over the past 12 months.

Popularity of supplier diversification

Supplier diversification appears to be a new and popular trend when it comes to addressing supply chain bottlenecks and building or maintaining resilience, with 90% of the respondents seeing this as a core strategy. A growing number of companies are working with multiple suppliers for certain components and raw materials. For 84%, onshoring – i.e. working with local suppliers – is an important strategy for avoiding the impact of turmoil in global trade and geopolitics. Another high-ranking strategy is switching to lower-cost suppliers (80%).

Building more stock

Building more stock is often seen as a way of countering supply bottlenecks. 64% of respondents did this in 2022, up from 49% in 2021. This year, 39% of companies are increasing their inventories of critical components, and a further 42% plan to increase inventories over the next 12 months. Among businesses in the processing of hardware and electronic components, construction, the automotive sector and utilities, around a third of companies rely on this measure.

More than a third of those surveyed have reverted to a just-in-time approach in the past 12 months, yet they also continue to build stocks of key components in their warehouses – especially automotive, electronics, hardware and utilities businesses. The return to just-in-time manufacturing confirms the results of the Reichelt survey in 2022, in which 70% of companies indicated that they could imagine reverting to that strategy.

Fear of price hikes

Despite the persistent supply chain volatility, there have been significant improvements in the sourcing of components and materials over the past two years, with only 36% still struggling to obtain certain items, compared with 80% in 2021. There has been a notably sharp increase in the fear of future price hikes, from 30% of businesses in 2022 to 61% this year. Meanwhile, concern about inflation is also strong (53%) and 52% of decision-makers see the general recession as another risk factor.

Concerns about the economic and political situation

While the end of the COVID-19 pandemic offered reasons for optimism in 2021, decision-makers are now concerned about the economic and political situation both at home and abroad. Dutch manufacturing companies see major potential threats in wars, recession and inflation, as well as the increased workload due to environmental regulations and the new supply chain law. For example, the war between Russia and Ukraine is having a substantial impact on 52% of respondents.

Desire for autonomy

The desire for autonomy appears to be a pervasive theme in 2023. 78% of companies hope for more official political support for Dutch research projects, such as the production of semiconductors or other essential components, to help them remain competitive and become more self-sufficient. In contrast, only 36% were in favour of this in 2022 and only 27% in 2021. Additionally, 69% see promising opportunities to expand their technological leadership and would therefore like to become more specialized in new areas of technology in the future, such as quantum technology (60%).