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Ready for the next supply chain disruption?

Euro Grassi
13 Oct, 2022

Covid measures, war, resource and labour shortages herald the end of the globalised world as we knew it. You can’t always rely on cheaper suppliers based on other continents anymore, but you have to be able to deliver your products at the same low price. At the same time, interest rates are rising, inflation surging, and consumer confidence is falling. With knowledge and technology, you build a flexible supply chain that can handle this perfect storm.

Covid restrictions in China closing down factories, the war in Ukraine and turmoil around the globe are testing supply chains constantly. Most famous is perhaps the chip shortage that is preventing products from being sold or even sold unfinished, but the issue is much broader. Some companies interrupt entire production lines, while others are lucky if that one missing screw or chip doesn’t get in the way of the final product. Relying on one supplier is no longer enough; you have to be able to move quickly so that you avoid empty shelves of retailers and dealers. Problems in your supply chain are issues, but not being able to sell is catastrophic. So, what might you need to consider?

Are We Heading Toward the Deglobalisation of Logistics?

You have to redesign your supply chain, but there are consequences when you diversify your suppliers and start nearshoring. Pricing: Shifting the supply of components from China to Europe or the USA can easily result in a cost increase of 3-7 times. Consumers are still willing to pay higher prices. But, will they when energy bills and higher interest rates on borrowed money start to limit purchasing power?

Availability of capability: It is quite a search to find the right supplier for components that meet the quality and delivery time you seek. The question is whether you can find them closer to home at all.
Transportation: A final product with few components is easy to source. Many products quickly consist of hundreds of components, each with a specialised supplier. It usually takes years to build resilient supply chains which consist of preferred suppliers and backup suppliers.

Tech Your Way Out of Disruption

You don’t want to put all your eggs in one basket. On the other hand, you want the best and most favourably priced components as soon as possible. Flexibility is essential to building a robust supply chain consisting of reliable suppliers and backups. A global ERP platform like Dynamics 365 can help in this transition.

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