Material Shortages: What Purchasing and Management Can Do
8 min read
17.2 percent of industrial companies reported material shortages in June – after 15.9 percent in May. The Strait of Hormuz is passable again. Yet the aftereffects still linger in procurement: chemicals, electronics, and electrical equipment remain tight. For management and procurement, controllable levers in inventory, dual sourcing, and contract pricing count.
Key Takeaways
- Shortage rate rises. ifo: 17.2 percent of industry in June with material problems, especially chemicals, electronics, and electrical equipment.
- Hormuz is over, but the buffer isn’t. Supply chains are normalizing slowly – those who only react to spot prices pay twice.
- Management levers are internal. Safety stock, second supplier, index clauses, and make-or-buy beat appeals to the world market.
Related:China+1 calculated: When a second location pays off / How the supply chain law reaches SMEs
What is a material shortage? A material shortage occurs when a company cannot procure intermediate products, raw materials, or components in the required quantity, quality, or timeframe. The ifo ratio measures the share of companies reporting such procurement problems – broken down by industry and updated monthly.
What the ifo figures really say
The ifo Institute asks monthly where intermediate products are lacking. In June 2026, the share of affected industrial companies stood at 17.2 percent, up from 15.9 percent in May. Klaus Wohlrabe, head of the ifo surveys, explains: The Strait of Hormuz is passable again, but the effects of the disruptions are still being felt. Full normalization of international supply chains will take time.
The industry breakdown is the real finding. In the chemical industry, nearly a third (29.5 percent) report material shortages. Among manufacturers of data processing equipment, electronic and optical products, the share rose from 25.5 to 34.2 percent. Electrical equipment stood at 27.7 percent. Mechanical engineering remained nearly stable at 15.6 percent. In the automotive industry, the figure rose from 10.0 to 15.7 percent. The situation eased for rubber and plastic goods: from 23.7 to 11.3 percent. Beverage producers reported no shortages at all.
Electronics/optics with material shortages in June
Source: ifo Institute, press release July 7, 2026
For SMEs, this means: the shortage is not an abstract macro topic. It sits in the bills of materials of chemical intermediates, in the semiconductor and sensor chain, and in the electrical components that already have long lead times. Those who only read the overall index underestimate the hotspots in their own portfolio.
Why Hormus Can Be Over and Procurement Still Stays Tight
Transport routes open faster than inventories. When shipping lines and freight forwarders resume operations, it takes weeks and months for buffer stocks, consignment inventories, and production schedules to catch up. At the same time, many suppliers impose tight allocation: those who remained loyal during the crisis and ordered early get priority. Those who relied solely on the cheapest spot market fall to the back of the line.
Then there is the price component. Material shortages drive up availability, surcharges, minimum order quantities, and cancellation clauses all at once. Management often only sees this in the following quarter’s margin. Procurement sees it in supplier confirmations-if they systematically track the deviations.
| Sector (ifo) | Bottleneck Rate June | Implication for SMEs |
|---|---|---|
| Electronics/Optics | 34.2 % | Longest lead times; evaluate dual sourcing |
| Chemicals | 29.5 % | Secure intermediates and specialty chemicals |
| Electrical Equipment | 27.7 % | Components for machinery and systems |
| Automotive | 15.7 % | Suppliers: OEMs often dictate allocation |
| Mechanical Engineering | 15.6 % | Stable, but not out of the woods |
| Rubber/Plastics | 11.3 % | Easing – renegotiate capacity |
Source: ifo Institute, Material Shortages in Industry, July 7, 2026. Total industry: 17.2 %.
Four Levers That Management Can Pull Themselves
1. Safety stock with a price tag. Buffer without a cost-of-capital calculation is expensive. Buffer without a service-level target is arbitrary. Per A-part: How many days of downtime costs stand against inventory carrying cost and obsolescence? The answer belongs in management’s monthly list, not just the planner’s Excel sheet.
2. Second supplier with real qualification. “Dual sourcing” on paper doesn’t help if the second source has never been sampled, never audited, and never entered into the ERP master data. For critical parts, qualification must happen before the primary supplier fails – not after.
3. Price and volume clauses. Index clauses, volume tiers, and clear force majeure thresholds reduce negotiation pressure in an acute crisis. Anyone who wanted only the lowest fixed price during the boom will pay with availability during the bottleneck phase.
4. Make-or-buy and design-to-availability. Some bottlenecks can be resolved in engineering: alternative specifications, standard parts instead of specials, local production for critical subquantities. This is risk management at the bill of materials level.
“The Strait of Hormuz is passable again, but the effects of the disruptions are still lingering.”
– Klaus Wohlrabe, ifo Institut
Note on citation: The sentence comes from the ifo press release of July 7, 2026. It describes the time lag between a reopened sea route and normalized industrial supply – exactly the gap that operational planning must close.
What Management’s Monthly Rhythm Now Needs
A usable bottleneck dashboard is short. It lists the top 20 parts by revenue and downside risk, the status of primary/secondary supplier, confirmed versus promised delivery dates, and the open price escalation amount. Plus once a month: Which three decisions does procurement need from management – budget for safety stock, approval of second supplier, redesign order?
Anyone who links this with the Supply Chain Act and location issues gains coherence: China+1 and dual sourcing are answers to the same figures that ifo is now driving upward again. The difference between reactive and prepared companies shows up in the next unconfirmed purchase order.
Frequently Asked Questions
What exactly does the ifo bottleneck ratio measure?
The share of industrial companies in the ifo survey that report problems procuring intermediate products. It is a sentiment and exposure metric – broken down by industry and updated monthly.
Is it enough to go back to the cheapest supplier?
Only if availability and quality are on board. In bottleneck phases, total landed cost including downtime often outweighs the pure unit price. Dual sourcing and transparent clauses reduce the risk.
Which industries are currently most affected?
According to ifo’s June data, especially electronics/optics (34.2 percent), chemicals (29.5 percent), and electrical equipment (27.7 percent). Rubber and plastic products have noticeably eased.
How do material shortages and location strategy interrelate?
Shortages make dependence on individual corridors and suppliers visible. A second location, nearshoring, or dual sourcing then become capex and governance issues for management, not just operational tasks for procurement.
What should management decide in the next 30 days?
Top A-parts with risk scores, budget for targeted safety stock, status of second supplier qualification, and whether a design-to-availability order is underway for two or three critical specifications.
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