July 11, 2023 – If 2020 and 2022 were to be infamous for both the COVID-19 pandemic and supply chain issues, it’s very clear that 2023 is going to be the year of financial challenges and considerations. This is true of the entire U.S. economy, but several financial issues are rippling through our customer base, and these issues impact our overall business as well as our lab business.
To a certain extent, we should not be surprised, but we do need to be prepared to face these challenges head on and be the very best consultants to our customers that we can.
At the moment, there is no doubt that inflation and the cost of money are high on the list and top of mind for customers. In this column I plan to look at both factors and their trends over time. I will also provide some ideas I hope are useful to the savvy account manager looking to consider some options to know, understand and help their customers to navigate these challenging financial times.
Let’s start by looking at inflation. Inflation is certainly on everyone’s mind and impacts us personally and professionally every day. First, for a little perspective, let’s all be grateful we are not planning our Christmas shopping in late 1980. Why? In addition to some questionable hair and fashion trends, Dec. 19, 1980, was the highest inflation rate on record – 21.5%. Not exactly a formula for a merry Christmas if you were last-minute shopping that year.
How does this contrast to the present day? From 2013 to 2020, we were blessed with very low inflation rates. In 2013, the rate was 1.5%, and reached a low of 0.7% in 2014. It never exceeded 2.3% during that entire time. While we all benefitted from the stable costs and pricing we enjoyed then, the sharp upward trend in pricing becomes even more surprising when it follows such a prolonged period of stable pricing. Inflation has taken off sharply since 2020 with a high of 7% in 2020. Between then and now, it has moderated slowly, with the rate at 6.5% in 2021 and the current rate standing at 4.9%.
While the current rate is an improvement, it does not appear likely to drop back to the rate of inflation we saw 10 years ago, so now is the time to address customer concerns. Before we get to options to effectively consult with our customers, what is driving inflation down and how do those factors impact us and our customers? From an anecdotal basis, really high levels of demand for lab, PPE and blood collection products have dropped significantly from their high levels during the pandemic. This is a two-edged sword: while we enjoyed the lift that COVID brought, NO ONE enjoyed the pain brought on by back orders related to critically needed product.
Read more in the latest issue of Repertoire Magazine.