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Energy Cost Impact Brief


Supply Chain Strategy Energy Cost Distribution

Distribution and manufacturing companies remain concerned about the impact of energy costs, and recognize that the problem is not an aberration and will not go away on its own. Market conditions preclude passing the inflationary effect of energy costs to customers and suppliers, so manufacturing companies must take assertive action in their supply chains to sustain viability.
A study of 139 supply chain decision makers from various industry sectors was conducted by Industry Directions during 2005 and 2006. Of the manufacturers responding in 2005, 77%, indicated that executive management at their company had become more focused on supply chain operations as a result of higher energy costs. Further, 78% of respondents said that it had resulted in their company reassessing its supply chain strategy.
After a year of monitoring and measuring the impact of higher energy costs, even more executives look to supply chain management to alleviate cost pressure. In fact, 79% of respondents note that executive management is focused on supply chain operations, while 69% say that their company is looking to change its supply chain strategy.


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