Material Cost Volatility and Supply Chain Disruption

Definition

Raw material price fluctuations create unpredictable cost structures, forcing fabricators to either absorb losses or renegotiate with customers mid-project. Supply chain disruptions increase costs for materials, energy, shipping, and logistics simultaneously. Many fabricators accept revenue losses to retain customers rather than pass full costs through, compressing margins. This creates working capital pressure and makes accurate project bidding impossible. The combination of supply uncertainty and inability to control input costs leaves fabricators vulnerable to margin squeeze, especially during recession periods when customers resist price increases.

Why This Matters

Supply chain visibility SaaS, commodity hedging advisory, supplier management platform, dynamic pricing/margin management tool, material forecasting AI

Affected Stakeholders

Owner/Plant Manager, Production Supervisor/Shop Foreman

Related Business Risks