Supply Chain Management: Business Considerations for the Current Economic Climate
Over the last year, the U.S. consumer price index has jumped 6.2%, signaling the sharpest annual rise in the last 30 years. Meanwhile, global supply chain bottlenecks and labor shortages have affected the procurement of goods and services across a variety of U.S. market sectors, including agriculture, household products, and medicine—to name a few.
The U.S. is not alone. In China, power shortages have dramatically limited production. In Germany, one of Europe’s biggest economies, trucker shortages, backlogs at ports, and supply chain bottlenecks have continued to hamper the country’s exporting prowess. In the U.K., the Bank of England recorded an inflation rate of 4.2%, with future projections topping out at 5% — the highest inflation rate reported since 1997.
Enduring Economic Uncertainty
Given the widespread wake of economic uncertainty caused by the COVID-19 pandemic, it is safe to say that inflationary pressures and global supply chain issues have emerged as substantial threats to businesses everywhere. Over the last year, everyone—from small businesses to start-ups, to established corporations and conglomerates—has been reeling from inflationary pressures, significant supply chain disruption, stifled consumer demand, and labor force shortages.
While consumer demand has steadily recovered since the COVID-19 lockdowns were lifted, supply chain issues, inflationary pressures, and labor challenges are here to stay. In modern-day markets, these unprecedented difficulties have combined to create a microcosm of economic uncertainty. Going into 2022, businesses and entrepreneurs must prioritize supply chain management and employee attraction and retention not only as core competencies but also as vital pillars of protection and resilience.
Supply Chain Management: The Vital Pillar of Protection and Resilience
Supply chain management will undoubtedly become a vital pillar for protecting your business. It is important to get a holistic grasp on every single supply chain that is relevant to your business model. It is not enough to consider only materials; logistics are equally as important to managing an effective and efficient supply chain.
When considering the materials and logistics that go into your business model, start by mapping out the start-to-finish journey for products, customers, and employees. Once these pathways are clearly laid-out, the next step is to identify areas where you can increase productivity, streamline costs, and maximize resources. Ultimately, the goal is to save as much money as you can, so you don’t have to raise prices for your customers; this requires having visibility and identifying all viable pathways and possible areas for increased efficiency within your business.
After identifying supply chain pathways and potential areas for improvement, utilize a “zoom-in, zoom-out” approach to evaluate each of the pathways at varying contextual levels. Zoom-in to evaluate the pathways at the individual, team, and business levels. Then, zoom out to evaluate them at the local, state, national, and global levels. By examining each supply-chain pathway within each incremental context, it will be easier to understand and anticipate developments within each market and adjust supply-chain management strategies accordingly.
Undoubtedly, 2021 has been a year of enduring economic uncertainty. Given global supply chain disruptions and record-breaking inflation rates, entrepreneurs and business leaders everywhere must work diligently to strategically position themselves for success in 2022. This positioning begins with prioritizing supply chain management as a protective essential and as an essential business function that promotes resilience.