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Opinion
Brooke Sutherland

Manufacturers Are Embracing DIY Supply Chain

Industrial companies are making deals and investments to gain more control of raw materials and reduce potential disruptions. 

How much will pandemic disruptions and shipping logjams reshape the supply chain landscape?

How much will pandemic disruptions and shipping logjams reshape the supply chain landscape?

Photographer: Allison Zaucha/Bloomberg

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Faced with rising inflation and a global supply chain that’s more akin to a game of Whac-A-Mole than an actual chain, companies are reaching for control where they can find it. For some, this has meant investing in more data tracking to get better visibility. There’s been a lot of debate about whether the pandemic disruptions and shipping logjams will inspire companies to shift manufacturing work closer to the developed-market end user — and there is some evidence that’s happening. But a growing number of companies are also deciding that if they want something done right in their supply chain, they might have to do it themselves. 

Sherwin-Williams Co. on Friday reported weaker-than-expected preliminary fourth-quarter earnings, adding to a string of disappointments for the paint maker that it has blamed on supply chain snarls, inflation and labor shortages. A wave of extreme weather events that closed factories in the U.S. Gulf region last year limited raw material availability, exacerbating widespread logistics pileups. So Sherwin announced in September that it was buying one of its coating ingredient suppliers — Specialty Polymers Inc. — and its less hurricane-prone facilities in Oregon and South Carolina. Hershey Co., meanwhile, bought a pretzel manufacturer with three facilities in Indiana and Kansas to support its acquisition of the Dot’s Pretzels brand and reduce the potential for supply chain disruptions. American Eagle Outfitters Inc. acquired a pair of logistics companies to help it better compete with bigger retailers in offering customers affordable fast delivery. And steel producers including Nucor Corp., Cleveland-Cliffs Inc. and Steel Dynamics Inc. have been buying up scrap processors to ensure a steadier supply of raw materials harvested from junked cars and appliances, according to an analysis by the Wall Street Journal.