Stockpiling and supply chain disruptions

Stockpiling and supply chain disruptions

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The pandemic is having a seismic effect which will extend further than the outbreak

The headlines have been full of stories of consumers stockpiling groceries in advance of a potential lockdown across the nation and the supply chain has been feeling the strain. The behaviour isn’t limited to retail, across a wide range of industries, companies are seeking to prepare for potential delays in essential deliveries, staff shortages and more. 

 

Food and drink industries struggle to keep up

There has been a surge of sales on staple goods but that is just the tip of the iceberg for the food and drink industry. At some point, people will use up those stockpiles which will lead to the delayed effect of depressed sales. Those working in fresh produce will face a further challenge if they can’t reach consumers, who are reaching for tins and packets in order to stay at home. Combined with staff shortages across the supply chain, this means that there is a possibility that many producers may find that much of their product is going to waste. This may be an opportunity to benefit communities and vulnerable people with free deliveries and contribute to CSR strategies in the short term.

 

Manufacturers shutting down due to shortages in staff and materials

Many factories have already shut down due to issues with the delivery of essential components as well as staff shortages as workers self-isolate due to sickness or concerns over vulnerable loved ones. Some manufacturers had stockpiled goods ahead of Brexit, but even if they have the staff to continue running, very few businesses remain in a position to buy. In addition, this simply kicks the issue down the road – the same concerns about loss of supply or delays in delivery are still there, and manufacturers will no longer have the stockpiles to carry them over when the transition year ends. 

 

Delays and uncertainty lead to currency risk

Situations such as this current pandemic show us just what a small world we all live in. Companies across the world are having to shut down, delay orders and rearrange their finances to keep the business afloat. As a result, there may be delays in payment, renegotiation of prices and quantities ordered. For companies operating with a global supply chain, there is the additional uncertainty of currency fluctuations. The FX market has been particularly volatile during the crisis which means that it is difficult to assess overseas costs and revenue due to both market volatility and a lack of clarity on payment deadlines. 

 

Currency expertise in uncertain times

We’re working hard to support our clients through this challenging time. Like many companies, we’re making sure our team are safe and well-supported - and we’re doing what we can do to help keep the economy moving. If you’re worried about the impact of currency fluctuations or delayed payments on your business or want to know more about how to plan ahead for what’s set to be a challenging year, give our team a call. 

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