Stormy seas still threaten supply chain globally

by Denys Hobson. Gone are the days when the supply chain was just another business function – it has become a fundamental cog for business resilience and growth and the past two years have highlighted the importance of having an effective supply chain that is agile, flexible and robust.

Rising inflation, interest rate hikes, strikes, Covid lockdowns, labour shortages and logistics disruptions are a few of the factors that retailers and importers have had to contend with, but we have seen retailers that have acknowledged this shift and have invested substantially in their total supply chain reap the rewards of revenue and margin growth.

While recent events have taught us to brace for impact at any moment, importers have been stretched to navigate a plentitude of disruptions in recent times and based on current global and local factors; they will further need to balance multiple factors within their supply chain to ensure they remain competitive. They also need to make decisions speedily to navigate their businesses around both the immediate and the medium-term factors.

Riding out the storm

And some have gotten it right. In fact, we have seen some retailers achieve phenomenal success over the past year despite all the volatility. These are the ones that have demonstrated what it means to be agile, innovative and collaborated with their supply chain partners to ensure they constantly drive efficiencies.  But this will be tested further

The outlook for the rest of the year may be even tougher when it comes to retail performance. With elevated fuel costs and rising interest rates, consumers’ disposable income will be diminished. This poses a new conundrum for retailers as they need to attract consumer spend regardless of these headwinds. How will retailers go about attracting consumers? Will we see retailers offering preferential credit terms to new customers? What about offering in-store and on-line discounts on a basket of goods? Will we see competition among retailers grow in the loyalty reward programs space? Could we see new symbiotic business partnerships formed and packaged in an appealing manner to attract new customers as well as maintain existing customers?

One thing is clear consumers will gravitate to where they feel they get the best bang for their buck and the supply chain better be ready to deliver.

Main image credit: Pixabay.com.

Denys Hobson is Head of Logistics, Investec for Business

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