Covid, war, and several other ongoing disruptions have increased the struggles of the countries like the USA, Europe, and a larger part of Asia with inflation. Simply a price rise amidst inflation is going to hurt the customer drastically. In November 2021, the Consumer Price Index (CPI) increased by 6.8% compared to the previous year, which is the highest in the last 30 years, and reached 8% in November 2022.
According to the World Bank, food prices have increased up to 3.5%, and shortages of goods have pressurized supply chains drastically. This, combined with a labour shortage, shipping delays, and a post-pandemic boom in consumer demand and satisfaction, only adds to the existing problems of supply chains. Supply chain optimization is one of the ways to lower costs and improve market share. How can companies and their supply chain safeguard themselves in this battle?
Resilient supply chain:
The inflation rate can easily break a company’s financial standing with a rapid change in demand and supply. Organizations need contingency plans and effective alternatives for shipping delays, increases in customer demand, etc., to not oscillate between overstock and shortages.
Companies can assess their supply chain strength through scenario simulation and formulate business strategies based on data, simulations, and constant evaluation of their KPIs. To have hindsight over the overall company’s operations, supply chain directors should collaborate with managers from other departments to build accurate scenarios and to have better hindsight.
Suppliers across the globe drastically improved procurement but increased shipping delays during crises. Regular supplier evaluation and visibility can efficiently decrease lead times. With increased inflation rates, suppliers with fixed contracts and unrealistic MOQs are certainly neither cost nor time-effective.
As overspending and price increase are equally risky for organizations, the friendliest option is critically examining and decreasing operational and non-operational costs. With better visibility of their supply and demand needs, they can cut costs by having the right safety stocks and evaluating suppliers and delivery time before it becomes a problem.
High-quality customer service:
When there is no option other than a price rise, companies must develop excellent marketing strategies to provide exceptional customer service and maintain customer/brand loyalty. For instance, a recent study by parcelLab shows that over 52% of British shoppers will re-order if they have real-time tracking and delivery updates on their home-delivery orders. Hence, little effort can reap enormous benefits for businesses.
Bank of England declared that Inflation might go down, but supply chain disruptions will not cease. Hence, the organization must reevaluate its supply chain resilience before the next big risk.