Fixing supply chain issues

Any unstable condition could impact business progress. Degree of such impact depends on how business strategy attempts to manage geoeconomics imperative. Recently due to Covid 19 entire globe got entangled in the longest and largest geoeconomics crisis: supply chain issues and how it can be managed.  Here are few hot takeaways:

To begin with, information management went awry at the outset of the pandemic. Already there had been no proper planning as regards to collecting and collating data regarding demand & supply movements. The lesson learned in the latest pandemonium was the urgent need to establish centres for doing this job on country wise and global basis. Unless demand is accurately forecast no business can venture into producing items that would later remain unsold. Equally important is the ability of taking into count changes taking place in terms customer tastes and buying patterns. Business must calibrate the production line so as to match with both demand and customer predilection.

The latest setback of chips manufacturing has resulted in several businesses going into red because they were unable to get products passing the finish line. Colossal shortage of required chips pushed motor companies to bring down their shutters. This is one thing. But the other most consternating one is the price of motor vehicles already in the hands of users shot up to unimaginable heights. When used items go up in price two things could happen. One, new cars rolling out would be priced more than what the market can bear. Two, this would have spin off effects over the supply of materials other than chips such as steel, aluminium, glass, plastic, rubber, fibre and electrical.

Freighting is another major variant that affects smooth processing of supply chain. There are several sub-plots here. Price of freighting overall has gone up due to non-availability of containers on one hand and lack of space in freight vessels on the other. Suez Canal debacle where a container ship got stuck over a muddy trench for more than six days, threw up worldwide shipping into the throes of chaos and resulted in heavy damages to the canal directly and froze global trade of several billion dollars indirectly. 

Freight Transport services have dual functions: facilitating the carriage of goods and networking with both buyers and suppliers in a co-ordinated manner. Eliminating delay is the cornerstone of any such transport entity worthy of its salt.   What is more such companies have to work with ports in case of sea freight and hubs in case of air-freight. To add to this there is another dimension: the railway network. For example, Yiwu – London Railway Line collects freight at Yiwu in, China for transportation to London UK covering a distance of about 7,500 miles and lasting 18 days. Sea freight in comparison would take 2.5 times of this duration. Moreover, in terms of speed it is faster than sea freight and in terms of cost effectiveness it is cheaper than airfreight.

China understands how geoeconomics work and how to fashion suitable business strategy in order to eliminate waste as well as delay simultaneously. Therefore, it is not surprising that even during the pandemic, production in China continued regardless and supply chains issues are fixed forever!

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist