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Fighting for Supply Chain Resilience - The Battle Against Inflation

 There is no question that the world's economies are struggling with inflation. The COVID-19 epidemic, production pattern modifications, and other disturbances to the supply chain finance have made things difficult for it to function normally. Professionals in the supply chain must now accept the unsettling reality that inflation and its effects will never go away.

Disappointment with the functioning of worldwide supply chains has been one notable result. In addition, the cost of shipping products by ocean or air has increased dramatically compared to before the pandemic, and the transit time has increased by more than twofold. This has resulted in shortages, long wait times, and higher pricing from the viewpoint of customers and Saas Company.

An adequate supply chain management solution is essential for a firm to succeed, especially in an era of escalating inflation. Companies that adjust and reposition quickly can turn the disruption caused by inflation into value and grow. Your approach to pricing, cost control, labour, and other issues will be explained in this blog.

What Does Inflation Mean for the Supply Chain?

The amount by which a group of products and services increase in price over time is measured by inflation. Operations throughout the supply chain play a crucial role in creating and absorbing inflationary effects. Any disruptions to the supply chain, including pandemics, natural catastrophes, and financial turmoil, directly boost inflation by causing a lack of raw materials, which drives up the cost of obtaining and producing commodities and ultimately raises prices.

There is a high demand for goods from consumers, but there are also post-pandemic labour difficulties and supply chain issues. As a result, food and home goods are becoming more expensive, and the average net income profits of roughly half of the companies that make these products have increased since Covid.

Major consumer product industry businesses are boosting prices to protect against shrinking profit margins in the hopes that consumers will continue to choose their preferred brands despite the higher price. In addition, global inflation has been accelerated by the current environment, notably the pandemic, which has seriously disrupted supply chains.

Supply Chain Optimization: Importance and Important Features

For a firm to succeed, especially in an era of escalating inflation, an effective supply chain management solution like Skyscend is essential. Supply chain leaders who must use platforms that exemplify these critical traits need optimized supply chains to provide vital capabilities:

 

1.      Resilience

Source materials, finished goods, and suppliers all suffer from inflation. Rapid discovery of substitute vendors, operational networks, and product designs is made possible by a robust platform that supports leaders' resilience, proactivity, and capacity for swift adaptation. It enables access to supply chain data in minutes instead of hours or days and can find and fix supply problems before they lead to shortages.

2.      Agility

Agile platforms are yet another crucial component of supplychains that are optimized. They create a digital duplicate of every component of the supply chain, gather signals from multiple systems and sensors, and offer insight into the effectiveness of every function in the supply chain operations, giving supply chain leaders unmatched agility.

3.      Expansion

 In addition to being an excellent instrument for addressing inflation-related disruptions, an optimized platform that is durable and agile also acts as a platform for innovation and corporate growth. These cutting-edge platforms may integrate and coordinate the use of AI/ML, empowering executives to make choices in real-time and fostering automation and ecosystem-wide collaboration. Now that their entire supply chain is being used as a growth engine for their company, they can continuously align their strategies and execution.

Total Lifecycle Visibility with Supply Chain Finance

It's not all bad news, either. For example, inflation issues can be overcome, and procurement professionals can employ data-driven decision-making, especially regarding their suppliers, by taking specific actions and, for instance, choosing whether to continue working with the same suppliers or find new ones.

Fortunately, and sadly, the COVID-19 epidemic and more recent events with the situation in Ukraine have made procurement leaders quite aware of the necessity to maintain flexibility in their supply chain strategy. Due to this, you must consider not just the entire lifecycle of your suppliers but also those of those suppliers. This will give you a better overall view of the process and prepare you for future interruptions.

Supply Chain Difficulties

According to the first theory, the country's recent shortages and price increases result from broken global supply chains. This initially appears to be evident. Periods during the pandemic when Covid infections caused factories to shut or operate at a reduced capacity were visible. Truck drivers, factories, railway, and port operations all suffered from illnesses and limitations.

 We lost the holding capacity in the belly of those planes, which had made up almost half of the air cargo space when health concerns drastically restricted international passenger air travel. The epidemic undoubtedly presented significant difficulties for supply chain operations.

If one adopts this perspective, one believes these issues will soon pass. There are several explanations as to why they might. First, these specific stresses should disappear if and when the health situation improves. Second, if a particular aspect of global supply chains is faulty, we may correct the issue and observe things flow freely once again. Finally, some people think that if we lessened our reliance on imports, we would be more resilient in our supply chains and less susceptible to such shocks.

Conclusion

Both directly and indirectly, the pandemic impacted supply chains because of a change in preferences and a robust policy reaction. Despite operational challenges, the world's logistics industry was able to meet this rise in demand partially. Global supply chains, however, faced and still face capacity issues. Due to these limitations, expenses have increased, and the delivery of goods from producers to customers has been slow.

Inflation and supply chain disruption are mutually exclusive. However, rising inflation rates necessitate an immediate response to address the impact on a company's operations, finances, and customer satisfaction. For businesses to strengthen their operations by controlling inflation, optimized and robust supply chain finance, like Skyscend, is needed. These platforms will also aid companies in thriving through innovations that spur new sources of growth.

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