German companies stocking up in face of supply chain uncertainty

German copmanies stocking up in face of supply chain uncertainty
Photo: Adrian Sulyok

German industry is responding to the disruption in international supply chains by stocking up in warehouses. A survey by the Munich-based Ifo Institute demonstrates that 68% of companies have increased the size of their warehouse, 65% have looked for additional suppliers and 54% now pay closer attention to their supply chains than before. 

German newspaper Zeit Online reports that the disruption in global supply chains has been creating issues for businesses across Europe since the start of Covid-19 pandemic in 2020. According to Lisandra Flach, head of the Ifo Centre for Foreign Trade, “companies are fighting on many fronts to avoid supply chain disruptions”. This challenge has been deepened by the increasing complexity of supply chains in the global economy. As has been noted repeatedly in recent years, just one small break in the chain can cause significant impacts in production levels. This uncertainty has led 38% of industrial companies to reorganise existing suppliers. 

The degree to which companies have been changing their usual supply practices differs depending on the size of the company. It is actually smaller and medium-sized companies (SMEs) that are more likely to be increasing stock levels (73%), whereas large companies are doing it somewhat less (64%). However, large companies are more likely to be searching for new suppliers (72%), whereas SMEs are less likely (55%). 

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