Why Is There Increasing Costs and Delays

The societal changes that have been taking place for several years and the various conflict situations around the world have an impact on our lives and on the business world. Increased delivery times and prices are among the impacts that have been strongly felt in recent months.

What justifies these increases and what do they represent?

What About the Delays

For some time now, delivery times have been very volatile and can change from one day to the next. We've even seen lead times that were weeks longer, and within 24 hours of each other.

The recent changes in lead times and their volatility are occurring for several reasons. Delivery times themselves are affected by transportation labour shortages and border delays. Border inspections are becoming longer and more difficult due to COVID-19, which significantly increases the time spent at the border. The lack of manpower in the transport sector causes completely different problems. We can think of the lack of drivers for delivery, but we must not forget the ports that are overflowing with containers where stocks accumulate without reaching their destination because there is a lack of stevedores.

The difficulty of receiving raw materials is also a challenge for manufacturers. Since they are themselves caught with a significant increase in delivery times and labour shortages, production lines are subject to temporary or even permanent closure.

It is due to all these reasons that delivery times have increased so drastically and are so variable today. To counter the problem, a few companies offer an accelerated delivery service. However, this does not solve the problem of customs clearance, ports or lack of raw materials if the parts are not in stock.

Table 1: Estimated New Timeframes

The above estimated lead times may vary drastically depending on the parts, timing and quantities ordered. Moreover, custom parts may require more time due to the problems mentioned at the beginning of this article.

What About Costs?

As you have probably noticed, prices have also been increasing in a similar way to the time frames. Whether we think of the increase in raw material prices, delivery costs or the lack of manpower causing an increase in salaries; prices are increasing in all spheres of our society.

Unfortunately, the sector in which we operate is no exception and we see sporadic fluctuations in costs. While most of our suppliers send out communiqués when they plan to increase their prices, a few adjust their prices daily.

Below is a table with estimated cost increases for consumables, parts, and systems. These estimates represent roughly the increases seen in the last few months of 2021. Furthermore we expect further increases in the coming year.

The increase in some products is so precarious that it is difficult for us to comment. For example, the price of resins used in water softeners changes daily and we have seen an increase of almost 40% over last year. That is why the estimates in the following table are made by excluding outliers such as regeneration resins. In short, the estimates in this table represent the increases seen in the last few months of 2021. While they may already seem very high, we anticipate further increases from our suppliers by the end of 2022.

Table 2: Estimated Price Increases