Every time I step outside it feels like my wallet gets tighter and tighter. It doesn't matter where you go, pay attention to your receipt and you'll quickly find too, that the numbers don't look the same as they did in 2019.
Companies are facing the same challenge. As inflation continues, they're managing supply chains with heavy impact. Aviraj Bedi’s, SVP of product management at e2open, says companies are specifically grappling with escalating costs of transportation, raw materials and labor, all of which is putting constant strain on operational budgets.
"Supply chain disruptions such as the recent Houthi attacks in the Red Sea and delays further compound issues, affecting inventory levels and fulfillment timelines. Industries heavily reliant on global sourcing, such as manufacturing and retail, face pronounced challenges. For example, following the Red Sea attacks, some automakers have halted shipping operations. This could impact both production and shipping costs as companies incur extra fees for alternative routes, ultimately increasing expenses for manufacturers, retailers and customers. Sectors with intricate supply networks, like electronics and automotive, are also impacted by global regulations and tensions. Companies are adapting by reassessing suppliers, enhancing resilience and exploring localized or diversified sourcing to mitigate these challenges," says Bedi.
Companies are adapting as best they can, implementing new innovations and strategies to support their production and procurement processes. Diversifying suppliers, leveraging networks to expand the ecosystem of partners, exploring localized sourcing and sustainable practices, Bedi says, can work as strategy options. "Companies that leverage technology to connect demand to supply, and their supply chains from end-to-end, not only with visibility to data and partners, but the ability to act or execute their decisions are finding the most success in navigating heightened costs. Innovations in technology, like automation, are being deployed to streamline operations and enhance cost-effectiveness," explains Bedi.
And what about government intervention? While there are policies and interventions working to lower economic stress directly, they vary by location and circumstance. A more applicable opportunity for companies to turn to may be technology that works hand in hand with varying regulations that adhere to necessary standards — and lower costs. For example, a global trade management software provides solutions for due-diligence screening, customs filings, duty management and more, which according to Bedi, mitigates risks while saving time and money.
Volatility is the name of the game today. When it comes to economic pitfalls, there's many options to consider while crafting a strategy for your business to take on the pricing effects, but technology and established networks might hold the greatest power.
