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22.11.11 – Raw material cost management key to business survival

Raw Material Cost Management: Survey 2011

The result of INVERTO’s annual survey of European executive decision makers has just been published and the conclusions show that raw material costs are now top of the business agenda.

Raw material costs affecting almost all businesses surveyed
Businesses feeling powerless to deal with supply bottlenecks

Spiralling raw material costs are having a significant impact on the success of European businesses, a European survey of CEOs and purchasing managers has revealed. Ninety-one percent stated that the price of raw materials was a key factor affecting current business performance, followed by economic prospects (63 percent) and competitive pressure (42 percent).

Population growth, natural disasters and shifts in the balance of political power are causing a systematic shortage of raw materials and supply ‘bottlenecks’. Businesses feel powerless to control the effects. Sixty-eight percent say that raw material price increases are having a negative impact on overall company results.

Respondents say the effect of rising costs has led to increases is their own prices; 61 percent have passed on costs to customers. But with not all being able to do this, the result is that operating margins are shrinking. And it’s only set to get worse, 83 percent expect prices will continue to increase in the next 18 months.

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