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Industry Pulse

manufacturing + distribution

2022    VOL 2

In June 2022, Sikich surveyed more than 100 manufacturing and distribution executives on demand planning, material costs, sign-on bonuses, workplace violence and more. Scroll through the results below.


The Sikich Industry Pulse surveys manufacturing and distribution executives from across sectors and the nation multiple times throughout the year, highlighting and responding to top trends as they arise. The Pulse results provide readers with real-time competitive intel to apply to their business strategies.

factors causing optimism to drop

In June of 2021, 81% of manufacturing and distribution executives rated their optimism at a seven or higher on a scale of one to 10. Now one year later, only 58% of manufacturing and distribution executives rate their optimism at a seven or higher.

The chart on the right compares this year’s optimism levels to last year’s:

Optimism About Business Prospects in the Next 6 Months

Remaining 4% of June 2022 respondents declined to answer this question

top 3 contributors to lowered optimism are:

Top contributors to lowered optimism are:


The LIFO inventory method allows a business to take its higher current prices and expense them through cost of goods sold instead of using the older lower prices. The higher cost of goods sold, in turn, produces a lower overall income for the business and thus, less tax is owed by the business. The higher the amount of inflation, the greater the benefit of the LIFO method. With the current high inflation rate, this may be a benefit for your business to consider.


According the U.S. Bureau of Labor Statistics (BLS), the 12-month percentage change in the Consumer Price Index (CPI) has soared to 9.1% in June of 2022, which is the highest it has been since 1981.

The Producer Price Index (PPI) for final demand increased 1.1% in June, seasonally adjusted. This rise follows an increase of 0.9% in May and 0.4% in April. On an unadjusted basis, final demand prices moved up 11.3% for the 12 months ended in June, the largest increase since a record 11.6% jump in March 2022.

That being said, it’s no surprise that 100% of survey respondents stated they have seen an increase in material costs in the last 12 months.

12-Month Percentage Change in CPI, Selected Categories, June 2022, Not Seasonally Adjusted

12-Month Percentage Change in CPI, Selected Categories, June 2022, Not Seasonally Adjusted

Source: U.S. Bureau of Labor Statistics

so, should you be passing a price increase on to your customers?

Here’s what your manufacturing peers are doing:

Material Cost Passed on to Customers

Material Costs Passed to Customers

To combat inflation, business leaders are also:

“While inflation affects the input costs of manufacturing, employers should also pay attention to how it affects their employees’ day-to-day lives. The cost of food, gas and everyday necessities are hitting employees’ wallets. This affects the budgets of the lowest paid employees the most. In turn, this can cause higher anxiety or elevated levels of employee turnover, as those individuals leave for better paying jobs. Maintaining a proactive eye on wage inflation, and adjusting your strategy as necessary, may help keep overall employee turnover down.”

– Andrew Paoni, MBA, CFP®, CFA, Partner,
Wealth Management & Investment Strategy

Meeting Customer Demand

Manufacturers across subsectors, from food & beverage to machinery and more, see an increase in demand, with 67% of respondents stating their demand has increased in the last 12 months.

Regardless of how their demand shifted over the last 12 months, many respondents stated that they are struggling to keep up with current demand.

The top 3 factors contributing to manufacturers being behind on meeting their demand are:

The top three factors contributing to manufacturers being behind on meeting their demand are:

Industry experts say you should focus on these five areas to increase your company’s success in navigating the supply chain:

industry has room to improve

According to the U.S. Department of Labor, every year approximately two million people throughout the country are victims of non-fatal violence at the workplace. Officials at the Department of Justice have found violence to be a leading cause of fatal injuries at work, with about 1,000 workplace homicides each year.

44% of manufacturing and distribution businesses currently do not have programs in place to prevent workplace violence

Unfortunately, we know that the industry is not immune to these events. The National Institute for Prevention of Workplace Violence estimates that reacting to a serious incident of workplace violence is 100 times more expensive than taking proactive measures for prevention.

The 56% that are taking action are doing the following:

Industry has room to improve workplace violence prevention activities

What can we learn when the unthinkable happens? Sikich’s Matthew Doherty presented on preventing violence in the workplace for manufacturers in conjunction with Molson Coors and Manufacturing Works. A recording of the webinar is available for you to view.

a look back, and ahead, at
technology and software investments

Here is where businesses say they have, and will, invest in technology and software:

*An insurance rider is an optional add-on to an insurance policy designed to provide additional benefits over what is stated in the policy.

Cybersecurity insurance policies should offer the financial resources you need to cover a forensic investigation, mitigation and the loss of business income due to interruptions.

Insurance companies usually have multiple incident response firms vetted and ready to provide their clients with trusted advice. 

Cybersecurity insurance should also include legal assistance in responding to extortion and breach requirements.

Companies can implement robust security controls to help lower the cost of their insurance policies. 

The growing number of ransomware, extortion and breaches is causing cybersecurity premiums to sky-rocket. 

It is not uncommon for attackers to discover insurance policies during a breach, leading attackers to believe the company can afford to pay higher ransoms. 

Some cybersecurity insurance policies may limit the types of security events covered, like loss from employees knowingly causing the incident. Most, but not all, policies have a statement about acts of war, which is a growing cybersecurity threat in our current global environment. 

Insurance companies look to control their claims expenses by requiring companies to meet specific compliance frameworks.

shift worker sign-on bonuses
- are they working?
If you want to set yourself apart from the competition to attract more candidates, you may consider offering a sign-on bonus for shift workers. Currently, only 28% of businesses offer sign-on bonuses for shift workers, and 45% of those businesses say it’s attracting more candidates. Here is a breakdown of what these businesses offer:

However, it seems as though candidates may wait a while before receiving payday.

Companies who answered that they are supplying sign-on bonuses have the following time lines for distribution of the funds:

Our team put together an article that covers additional elements you need to consider before adding sign-on bonuses to your compensation package. The article also discusses the pitfalls associated with sign-on bonuses to be aware of. Learn more about these considerations and pitfalls here.

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