Majority of German Companies Have Changed Sourcing Strategies in Response to Supply Chain Disruptions

The vast majority of German companies have taken concrete action to adjust their supply chains since the coronavirus pandemic. This is a finding of an ifo Institute survey of 4,000 companies conducted in June 2022 and published by the EconPol Europe research network. The survey found that 87 percent of manufacturing companies have changed their sourcing strategy in response to supply chain disruptions. In wholesale, the respective share was 76 percent; in retail, it was 63 percent. “In an earlier survey conducted in May 2021, less than half of all companies said they planned to adjust their procurement strategy. This shows that many companies have re-evaluated supply chain risks since then,” says ifo researcher Andreas Baur.

68 percent of all manufacturing companies have responded to supply chain disruptions by increasing their inventories, while 65 percent have further diversified their supply chains by adding new suppliers and sources of supply. Approximately half of all companies report measures to improve their monitoring of supply chains. Just 13 percent have reintegrated previously outsourced production processes into the company. “We are observing that small and large companies are pursuing different strategies. Large companies have in general adopted more measures in response to supply chain disruptions than small and medium-sized companies. Moreover, while large enterprises have put stronger emphasis on the diversification of suppliers and supply chain monitoring, SMEs have focused relatively more on increasing inventories,” Baur says.