What next for supply chains?

What next for supply chains?

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What next for supply chains?

Until the pandemic broke out in early 2020, the supply chain was hardly a part of the day-to-day lexicon for most. To many people, the supply chain was an abstract part of the economy that operated seamlessly behind the scenes. As long as shelves were full and online orders arrived within two weeks, there was no reason for consumers to look any further.

 

That all changed with the spread of COVID-19, when parts of the supply chain came to a screeching halt – first in China, and then soon after in Europe and North America. Factories emptied, with employees sent home to quarantine, ports closed, and consumers snatched up every last bottle of hand sanitiser and roll of toilet paper.  

 

Not long after, Brexit arrived, delivering a one-two punch to an already fraught supply chain and economy. More products disappeared from shelves, lorries lined up in days-long queues, and EU workers left the UK, leading to severe labour shortages and driving up inflation.

 

And then came the blockage of the Suez Canal in March this year.

 

On top of these major global events, we can’t overlook the role of the supply chain in the net-zero transition  – which has become the centre of the world’s attention leading up to and throughout COP26.

 

Nearly two years into the pandemic and almost a year post-Brexit, there’s no question that the supply chain plays a major role in news headlines and our day-to-day lives – and rightly so.

 

But one aspect of these supply chain disruptions that impacts millions of businesses globally and isn’t being talked about, is the uncertainty of currency fluctuations.

 

At a global scale, the supply chain impacts wholesalers importing from overseas as well as manufacturers aiming to launch goods in foreign markets.

 

As a result of disruptions caused by COVID-19 and Brexit, businesses have experienced delays in payment, renegotiation of prices and quantities ordered. On top of this, companies are now re-evaluating their supply chains in a bid to become more sustainable and take steps towards net-zero.

 

Small businesses can be particularly vulnerable to volatility and disruptions to the supply chain, and in the UK they are said to “bear the brunt of labour shortages and price rises that have hit swathes of the economy this year.”

 

It gets even more complex: for businesses operating in a global supply chain, uncertainty of currency fluctuations can lead to difficulty assessing overseas costs and revenue due to both market volatility and a lack of clarity on payment deadlines. 

 

While some companies are seeking domestic suppliers to address border closures or limit carbon emissions caused by shipping, most businesses don’t have an option when seeking to import specialist goods and components and deliver overseas sales revenue.

 

But there are other ways to limit risk:

 

1.    Add suppliers and partners. In some cases, creating a more robust supply chain means intentionally “doubling up” on suppliers and logistics partners overseas, to reduce dependency on one or a limited number of partners who are inevitably experiencing their own delays as a result of supply chain disruptions. 

 

2.    Between COVID-19 protocol, Brexit regulations and delays in the supply chain, businesses have much more admin to deal with than they used to. And, while adding partners overseas will ensure you always have enough stock available to serve your customers in the UK, managing new relationships requires additional time and attention.

 

Make your life simpler by using technology, like moneycorp API, which enables full-automation of the payroll system for your company, automates international payments to suppliers, monitors exchange rates and automates conversions at a desired value.

           

3.    Finally, you can work with a specialist international payments provider to help you address a wide range of business requirements, from managing urgent international transactions to mitigating the risk of currency fluctuations. Having the support of a currency specialist can also help protect profit margins, avoiding costly transfer fees from banks and FX providers.

 

Between projections for continued disruptions into 2023 and signs of holiday consumer demand rising earlier than usual, it’s important that SMEs take steps now to mitigate risk during what is predicted to be another tumultuous year. By doing this, they can rise above the challenges and seize the opportunities that exist in the current landscape.

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