Supply Chains and Inflationary Pressure
Whilst the world is getting madder by the day, and the newspapers report impending doom and the end of China as the ‘Global Workshop’ – we are quietly supporting our customers and shipping to them several times a week.
Our supply partners are working harder than ever to come up with clever ways of satisfying our customer needs, and we remain light on our feet to react to whatever and whoever throws the next obstacle at us. We have no control over what governments dictate, but we do have control over how we respond to them, how we adapt to situations, and how we reach constructive solutions.
Global supply chains
Global supply chains have been under pressure for some time, with inflationary pressure linked primarily to shipping, but commodity prices have now joined the party and costs are rising in every industry. Whilst all companies will feel the brunt of the increase, it’s the SME that often struggles to deal with the price increases and face an erosion of margin as larger customers can say ‘no’.
So what can be done about it and is there a way out of this?
Our first suggestion is to ignore the media and geopolitical posturing – this has nothing to do with SMEs. There will no doubt be some multinationals that pull out of China– it will be interesting to see where they go? We strongly believe Chinese manufacturers have a huge amount to offer; the infrastructure, education, quality and service are fantastic – it has been fantastic for the 26 years of doing business there, and nothing has changed.
If your concern is cost increases, it is unlikely bringing production back to the UK will be a good option – is the capacity there, and what additional price increases will you face?
3 Questions to ask yourself in order to beat inflationary pressures
We believe the opportunity to beat inflation is not in what you buy, but in how you buy it, and SMEs can wipe out much of the inflationary pressures if they focus on 3 core aspects:
1. How long is your supply chain? Do you know all the companies involved and are they adding any or enough value? Would you benefit from a Plan B
2. Do you enjoy a genuine symbiotic relationship with your supplier? Suppliers will favor their friends, and price increases (and service) will hit those most distant the hardest. Our suppliers are absorbing many costs for the long-term interest of our customers.
3. Think about buying a greater proportion of your product and adding greater value? Are you just playing at what you buy from China? Add value to your spending and reduce your overall product costs.
Chinese Economy 2022
The Chinese economy relies on domestic consumption (currently not good), property (currently not good), and exports which are holding up relatively well considering the lockdowns – whatever your views on the CCP, the policy changes they implement have a big impact. Our guess is they will need to ensure the export market is working as efficiently as possible post lockdowns.
Re-assessing your strategy takes time, our solution is based on understanding your needs and finding a long-term partner to support those needs. We provide full supply chain transparency, so you will know exactly who you are dealing with and have our full support to manage your interests in China.
Our services come with no obligation to proceed, so there is little to lose and much to gain from a quick chat.
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