Source page: McKinsey & Company
Commentary
The price might be right
Supply Chain Management
January 26, 2022 – Not since the 1970s has inflation been such a central issue for companies, so finding creative ways to mitigate price increases is a dormant skill in many organizations today. As a first step, companies need to know if higher materials costs are warranted. In the case of this T-shirt, the answer is yes.
To read the article, see “How to deal with price increases in this inflationary market,” January 13, 2022.
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Visual form
Time-series line chart with a companion summary table and stacked impact bar.
Layout / body structure
The chart is split into two parts: a three-line time series on the left and a compact decomposition panel on the right. Reader first follows the indexed cost lines from 2018 through 2021 and then uses the right-hand change table and stacked column to see how those changes flow into total-shirt cost.
What is being compared
The visual compares shipping, labor, and cotton pricing for a 100 percent cotton T-shirt over time. It also compares how those three input categories contribute to the total cost increase by August 2021.
Measurement system
The line chart uses an index with September 2018 set to 100, while the right-side table reports percent change from September 2018 to August 2021. The stacked bar reports impact on total cost in percent, with the three component segments labeled and summed to a total of 6.6 percent.
Visible structure inside the graphic
On the left, three colored lines share one time axis: shipping climbs sharply, labor stays almost flat, and cotton dips before recovering. On the right, a short change table lists the cumulative moves for each input and a stacked vertical column breaks the total cost impact into three labeled colored blocks.
Main takeaway from the visual
The chart makes it clear that the reasonableness of a price increase depends on which cost input is being cited, because the inputs have moved very differently. Shipping is the visual outlier on the line chart, while the stacked bar shows that the total cost effect comes from the combined contribution of all three inputs rather than one line alone.
Key standout values or extremes
Shipping rises by 184 percent from September 2018 to August 2021, compared with 19 percent for labor and 12 percent for the Cotton A Index. The impact bar totals 6.6 percent and is split into three component blocks labeled 2.0, 2.8, and 1.8 percentage points.
Controls / sequence, when applicable
This is a static chart image with no in-chart controls to operate.
Companion media, when applicable
There is no separate companion audio or video; the chart image is the full visual on this page.