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GUEST COMMENT Supply chains can thrive, even as economy teeters on edge of recession


Recession is on the horizon, the reports tell us. Consumer confidence is near an all-time low contributing to a significant fall in consumer spending in the UK. For businesses, margins will shrink; precision and planning are the way through this oncoming storm, writes Joao Guarisse, VP Industry Solutions at o9 Solutions.

Joao Guarisse, VP Industry Solutions at o9 Solutions

Organisations cannot simply rely on traditional ways of working in this era of uncertainty. Instead, they must consider contingency plans to minimise cost and material waste while also making sure that customers who are still willing to spend aren’t left empty-handed.

Here’s what organisations should consider in order to beat the slump in consumer confidence, and avoid lasting impacts on business as recession arrives.

  1. Streamlining inventory

In a volatile business landscape, supply chains need to be as equipped as possible to quickly navigate disruption and changes in demand.

2021 and beyond saw extreme disruption in shipping and transport across the world, heightened by the Suez Canal blockage and persistent industrial action across key services like transport and container ports. Not only did these issues slow operations down, but they also inflated costs significantly: by the end of September, global rates for container shipping were nearly ten times higher than in January 2020.

This is just one example of how traditional planning processes have been rendered obsolete; the most effective way to equip businesses is to simply arm them with complete visibility and control over their stock. With greater visibility, suppliers can streamline their production schedules and ship an accurate number of products to reduce waste and costs.

In these uncertain times, consider extending visibility upstream to your suppliers to stay agile in the face of disruption. Companies can share data upstream, meaning suppliers can have more insights about downstream demand trends . In turn, the supplier can plan their own supply chain, manufacturing, and shipment planning accordingly. This way, upstream suppliers streamline their production schedules and ship an accurate number of products to reduce waste and access costs.

By utilising and sharing live data, businesses are in better stead to manage suppliers and other third parties, becoming much more able to determine how much stock to try to shift. This, in turn, allows for more accurate planning and management of individual supply chains, manufacturing lines, and logistics.

  1. Investing in better systems

The global post-pandemic recovery in 2022 saw demand outstrip supply of key materials, as producers struggled to restart operations due to staff shortages. This resulted in depleting stocks around the world. For example, the global shortage of precious and industrial metals, coal, and oil and gas, resulted in inflated costs as well as supply chain crisis.

Having access to real-time market data, and internal shipping data, as well as the tools to project a complete view of the supply chain and how best to navigate it, is vital. Investment in IT capabilities is critical to sensing disruptions earlier, and to making contingency plans quickly. The use of AI to create self-healing networks is an exciting development in supply chain planning, as it uses software to reroute goods and services around the supply chain in response to disruption, bypassing slower planning exercises humans usually undertake

Digital twin technology also grants organisations access to holistic decision-making in real-time, allowing better interoperability between different business units, dissolving data silos, and cutting down on decision lags. Through this, businesses can now also benefit from more granular planning, for instance modelling bottlenecked capacities in higher levels of detail.

  1. Establishing secure connections with suppliers

With the business landscape currently characterised by volatile inflation figures, it is increasingly important for organisations to invest in supplier and customer relationships to better regulate pricing and product availability.

This was displayed most recently when the UK was hit by a Christmas turkey shortage, worrying consumers and devastating small businesses in the peak festive period. Retailers had to ration their existing stock whilst relying on larger, international suppliers as a contingency solution. These good relationships with international suppliers equipped businesses with fast and cost-effective responses to unforeseen disruption, helping them to stay afloat during times of economic uncertainty.

Tackling future disruption
Our tricky economic climate and ever-changing conditions for production of goods has led to more unprecedented disruption than ever as we enter 2023.

It is only through effective decision-making based on visible, extensive, and well-analysed data, that companies can respond to unforeseen changes faster than usual – and as fast as their customers need.

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