In our ever-chaotic world, supply chains are under increasing pressure from a relentless number of factors. Brexit rolled into Covid-19 which rolled into the Ukraine War, each with its own unique challenges that have a direct and indirect impact on supply chains. For consumer products, the most obvious visual of these pressures is the empty shelves in our stores.
But what are some of the stages throughout the supply chain that can both lead to these shortages and also be used to mitigate risk?
Raw Material Sourcing
Consumer Products typically contain a significant number of input materials that will come from a variety of supply sources. Ensuring all of these supply chains are aligned and monitored effectively is key, as even one shortage can have a significant knock-on impact on your overall supply. By aligning these different supply chains, or by reducing the length of the supply chain, you can effectively and sustainably manage the end-to-end process from raw material to the end consumer. An additional level of cover can be provided by having alternative suppliers readily available in case of a shortage from the regular supply streams.
A number of factors have affected the ability to transport goods effectively around the world in recent years. Lockdowns in different countries at different times, a certain boat clogging up the Suez Canal, right down to Brexit reshaping the British border as we know it. Consumer Products have been impacted by this as much as any other sector, due to both the movement of raw materials as well as the finished goods themselves, leaving the sector exposed on many fronts.
Effective long-term planning and having an adaptable supply chain will allow businesses to alleviate these risks and continue to stock warehouses and shelves. By preparing your supply chain to manage in the face of these external factors, the impact on the end consumers will be reduced.
Demand for warehouses has continued to outstrip supply following a catalogue of events that have led to increased stockpiling, including Brexit and the Covid-19 pandemic. Furthermore, many firms are attempting to bypass supply chain issues by holding as much stock as possible close to its final demand point, pushing warehousing prices through the roof.
CBRE noted that consumer products are very much a part of this trend, largely to reduce supply chain disruption. With just 1.18% of UK warehouse space standing empty, costs for warehousing space are high – however, for many firms, this is the best option to mitigate short- and long-term risks across their supply chains.
The final stage of the supply chain, the customer, could be considered the most difficult to manage. If supply cannot be fulfilled and there is a direct alternative, customers will change their demand to an alternative supplier without hesitation. Within a sector such as Consumer Products where there is likely to be a number of suppliers operating in the same space, customers can easily switch their loyalties. Therefore, a short-term drop in supply could have lasting long-term impacts on businesses.
By managing all aspects of the supply chain effectively, alongside keeping track of market trends and external risk factors that will have an impact, businesses can ensure that they are running an effective and sustainable supply chain.
To find out how we can help you and your organisation to reduce the complexity or mitigate the risks in your supply chain, please contact Katy Gallagher, Head of Consumer Products, or Gopal Iyer, Head of Supply Chain.