Riding the Roller-Coaster of Cost Price Volatility
Gone are the days of stable pricing as the cost of energy and raw materials continues to fluctuate wildly. It wouldn’t be so bad if it came down occasionally, but things only seem to be going in one direction – up!
Like most manufacturers, the Klarius Group of Companies (including Klarius, Emissco and KMT) has absorbed increased price pressures wherever possible, offering customers a degree of product price stability. Tackling monthly and even fortnightly supplier price changes, usually with only a few days’ notice, is no mean feat. Now as energy and raw material prices are set to reach record levels, the burden will be felt throughout the supply chain.
“These are unprecedented times, we’re regularly having to review material costs within the business,” say Mark Brickhill, CEO. “In years gone by we’d have guaranteed customer pricing for 6-12 months at a time, but now we’re having to pass on costs mid-month! Unlike fuel on the forecourt, our industry and customers haven’t experienced such fluctuations before, but due to these changes, the price of our finished products must rise in accordance.”
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A particularly challenging area for the group is the extreme volatility in AdBlue production costs. Large volumes of natural gas are used in the production of AdBlue and as conflict continues to put constraints on European gas supplies, AdBlue costs are on an upward trend. Consequently, this puts more pressure on car owners and the predominantly diesel-powered transportation industry.
“Efficiency is key,” Mark continues, “it seems all market forecasters expect natural gas prices to increase in the near future. When pricing does go up, we will need to pass it on quickly, but by the same token, when and if pricing comes down, we will also make sure our customers see the benefit. We’re committed to supporting our customers through this pricing roller-coaster. It is by no means an ideal scenario; however it is vital to maintaining smooth supply chains and will allow us to still deliver high quality products.”?
Associate Marketing Director at Klarius
2 年Never have I experienced such rapidly changing pricing as we've had in 2022. I'm proud of the effort our team is putting in to manage the challenge and support our customers!