Inflation and the Global Supply Chain

We’ve seen and heard a lot about the rising cost of pretty much everything over the coming months. The cost of living is rising and is set to do so even further later this year. However, the rising costs don’t just affect personal matters but span far beyond into commercial and industrial sectors. Transportation and raw materials are rising as well as many other aspects of business. So, how does this affect the global supply chain?

Supply chains, as you well expect often fall into a domino effect when it comes to infrastructure, timings, and pricing. Once one element is affected, this echoes out throughout the chain into links well beyond the original source. As consumers, this is reflected in the retail prices we see at the checkout, but for businesses, this can be a whole lot more complicated and so many more considerations need to be taken into account to ensure the fine balance of logistics and supply is maintained. 

If one element of a supply chain is affected by rising costs, such as raw materials for instance, it’s often an easy decision to either soak up that cost internally to maintain a valuable proposition to the consumer among a competitive marketplace or increase prices slightly to accommodate it without the need for shaving profit margins. However, in 2022, rising costs aren’t going to affect one element. It’s affecting raw materials, logistics, wages, recruitment, energy and more. Almost everything is going up, which means prices must go up in order for businesses to maintain a healthy (or even just a manageable) profit.

Energy is the big issue here for both consumers and businesses, as this is a sector that feeds into practically everything necessary as a critical input. If your business works with a fairly long supply chain, you may feel this rising cost the hardest as every link in the chain deals with and increases rates accordingly. This calls for close monitoring of costs at all stages of all processes. Do you have an operational risk framework? Are you monitoring your supply chain closely and have sufficient reaction controls in place to ensure your business (and your bank balance) stay attuned to the latest developments? The next 12 months are certainly not going to be easy for any business, but the more prepared we can be, and the more we can lay out plans and positive courses of action, the more we can alleviate the financial pressures we face.

At Simply Brands, we consistently and continually work closely with our global partners to ensure a transparent and clear communication channel. This means we are always one step ahead when it comes to understanding and awareness of global trends, costs and estimations in the near and far future. Careful planning and flexible working with a solid goal of high quality and great value means we are managing to deliver our products to our customers with the best possible price and time frame available at that time. Prices may be increasing to meet with global pressures, but this doesn’t mean your business isn’t getting a great deal, and if these increases prove to be transitionary and temporary, you can be sure our teamwork consistently to adapt with what’s to come.

It's a certainty that inflation and the rising costs of almost all aspects of life and business are going to be affected in the coming months, but it’s our understanding, reactivity and proactivity that will set businesses apart and ensure survival.

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