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Contributed by: Admin 2

A Complex Problem: Rising Costs, Supply Chain Disruptions, and Labor Shortages Continue to Affect Businesses

Contributed by Steve Weiand, VP Client Relations

“The annual inflation rate in the US accelerated to 8.5% in March of 2022, the highest since December of 1981 from 7.9% in February and compared with market forecasts of 8.4%. Many analysts expect that March will mark the peak in inflation, supply chain bottlenecks persist and consumer demand remains elevated which is likely to weigh on the CPI for longer.” – TRADING ECONOMICS [1] (source: U.S. Bureau of Labor Statistics)

As inflation is running high, it is impacting businesses in various ways including higher costs of raw materials, increased production and overhead expenses, and eroded buying power of consumers. Although there are numerous contributing factors to increasing costs including the pandemic-driven challenges, the labor shortage crisis is also adding to the rise in inflation. As companies struggle to fill job openings at all levels, the rise in salaries has impacted the rate of inflation. While businesses are experiencing interconnected challenges from sky-high inflation and labor shortages, they are also grappling with supply chain disruptions that have hindered recovery from the pandemic, increased inflation, and disrupted production and distribution.

 “Constraints on firms’ ability to meet demand stemming from supply chain disruptions are widespread and are leading to moderately lower revenue growth. As if the widespread and significant supply chain disruptions weren’t enough, they are part of a dual threat to firms’ ability to meet demand. Reports of labor shortages are widespread, with difficulty in finding new employees. And, these difficulties do not appear concentrated in any particular sector of the economy.” – Richmond Fed Research and Commentary [2]

While businesses in all industries were gearing up to invest toward recovery from the abrupt operational disruptions caused by the pandemic, the multiple challenges of inflation, supply chain disruptions, and labor shortages have delayed the economic recovery and pushed the Consumer Price Index to an all-time high of 287.71 points. In addition to the struggles of managing business operations in a volatile economic environment, it is also a challenge to seek support from external partners as the economic impact is spread across a wide range of industries. For different support functions, outsourcing creates a positive impact on business processes but it is a challenge to find outsourced partners that have the capacity to overcome current economic challenges and help their customers to improve efficiencies, reduce costs, and increase focus on core competencies. However, some industries and essential services continue to get ahead of the persistent challenges and factors by their proactive approach to address the upcoming problems. In facilities maintenance services, for instance, there are some established and experienced businesses that have successfully weathered the labor shortage storm without any consequences on their service delivery and quality standards.

As a facilities maintenance service partner, Diversified Maintenance has frequently faced and resolved worker shortage challenges much before the recent shift in the labor market dynamics. The current situation is not unprecedented in nature for this industry, but it takes effective strategies to ensure high employee retention and low turnover despite the general uncertainty in the market. The Company implements effective strategies related to employee development, management, communication, recognition, and engagement. As a result, Diversified Maintenance continued seamless operations during the pandemic over the past two years, while ensuring their dedicated management team continues to attract new talent, nurture the existing workforce, provide training and development opportunities, and promote job satisfaction. To learn more about Company’s effective employee retention strategies and the strengths to overcome labor shortage challenges, send me a note at



[1] Trading Economics: United States Inflation Rate

[2] Richmond Fed: Firms See Continued Supply Disruption and Labor Constraints Decreasing Revenues and Adding to Costs