Our expected challenges for 2022, and how we'll tackle them

Well, another year is drawing to a close for 2022. It’s safe to say the past couple of years have forced businesses, large and small, to tweak and change the way they operate. Constantly having to adapt to the shifting and unpredictable landscape, and enable their businesses to not only survive, but thrive. All whilst maintaining existing and cultivating new relationships, mostly through a laptop screen.

So how can we better prepare for 2022? There are a number of challenges we’re expecting to face, or continue to face as we go into 2022. With careful planning and strategic changes to the way we work, there shouldn’t be anything that we can’t overcome, with little or no impact to our clients.

Your suppliers are running at reduced capacity

One of the biggest impacts to the business in the last year or so has been the supply chain. This is because many factories around the world, and in particular China, are running on reduced capacity at a time when they are already at high demand. There isn’t really an option to tackle this other than seeking additional factories/suppliers however that can become a challenge in itself and cause inconsistency with your product.

We find the key to tackling this is actually being transparent about lead times. We are in danger of disappointing our customers by trying to adhere to our original timings. Historically, we have asked for 30 days, however we now budget and anticipate 60-90 days production lead times in the UK.  But, by working closely with our clients and partners, we can get orders in sooner and effectively eradicate the delay by communicating and organising orders to stay ahead.

Shipping rates aren’t decreasing any time soon

Whatever industry you work in, we’ve all seen increases in costs and as we look ahead, it’s unlikely they are going to reduce any time soon! The area in which this is most apparent for us is shipping. However, we have spent a large portion of this year assessing our current shipping packaging and are finding ways to make sure space is maximised by reducing volumetric packaging. Therefore allowing us to fit more into every container; thus reducing shipping cost per item and reducing packaging waste.

This is no simple task, but by spending your time now on packaging research and design, you will help your business overcome the inflation of shipping. Lower cost for us and you, and better for our planet.

Raw material costs could begin to fall 

Raw material costs are at an all-time high as demand outstrips supply. However, we should begin to see a reduction in pricing of raw materials over the next year, so we are advising all of our clients to be reactive with their stock. Buy little and often, and never overstock. This way you can save on costs when costs come down and don’t sit on surplus for too long unnecessarily. Overstocking of course offers a buffer should prices rise even further, and there are pros and cons either way, but markets do suggest a reduction in the coming months.

Price checks using market pricing is valuable but not reliable  

Due to the instability of the marketplace in the UK, prices and costs in the current climate, market pricing isn’t as reliable as it once was. Particularly if you are purchasing seasonal products which have been in stock for a long time. So, when working out those UK market prices, remember you’re working to a market price 16 weeks away (if you are working to a 16-week lead time as mentioned above.  

Of course, none of this is clear cut and simple, but with our expertise and experience in working with our global partners, we can ensure you’re organised and prepared for whatever happens. 

Hedging of currency – make sure you cover what you have coming in

If you're using the current exchange rate to price your purchases make sure you buy the currency then. It may improve in your favour but there is a good chance it won’t also. So by buying the currency when you place your order you know exactly what that landed price will be when it arrives. Variables add risk so everything one can do to mitigate this helps.

It can be a daunting time looking to a brand-new year ahead, especially as there are so many unknowns coming our way personally and professionally. However, it can also be a time to reflect on the previous 12 months and be excited by the possibilities, progress and growth we can make in 2022.

To find out more about how we can help your business maximise 2022 opportunities and stay ahead to avoid any delays in your supply chain and production, get in touch with our Simply team today.