Navigating The Supply Chain Maze: The Ripple Effect On Futures And Commodities

Supply Chain

Climate change, labor shortages, inflation, economic stability, and shortage of raw materials, among other disruptions, have made supply chain management and procurement more complex.

This pressure has forced procurement and sourcing leaders to continue adjusting their strategies to minimize risk exposure, address the needs of shareholders, improve customer experience, and control spending.

However, according to experts at Global Consulting, the key to overcoming such challenges lies in getting accurate and timely supplier insights.

Challenges & Their Ripple Impacts On Supply Chain Procurement

Supply chains globally consist of various businesses, including merchants, distributors, warehousing, freight forwarders, suppliers, and manufacturers. These businesses help to move information and resources globally. They span different countries and continents, generally leveraging low production, commodity, and labor costs.

Organizations that are looking to take advantage of the global supply chain’s benefits should overcome a couple of hurdles, most of which are complicated, including:

  • Defects and quality control: Quality issues can sometimes be hard to manage. For instance, businesses should consider variance in an acceptable defect level among different countries.
  • More lead time: Buyers increasingly demand faster deliveries. The expectations have increased, thanks to technological advancements in eCommerce.
  • Cash flow management: Cash flow management is a critical matter in businesses, but it is difficult in supply chain management and logistics.

The Effect Of Shift In The Supply Curve

Shift In The Supply Curve

A change in the supply chain may have an effect on procurement. When the curve changes, the supply or demand for services and goods has also changed. This change may impact pricing for certain services and products, causing fluctuations, that procurement teams must be aware of.

Procurement teams should stay updated with those changes to secure good deals for their businesses. They should also prepare to adjust strategies to remain competitive.

The best way a procurement team may navigate the ripple impact in the supply chain is to diversify their customer base. By working with different suppliers for different services and goods, your business will mitigate the risks associated with fluctuation that market changes cause.

Another important aspect is to maintain a solid relationship with your suppliers. A good relationship established on an open communication channel fosters collaboration between suppliers and organizations. This helps to build resilience against sudden shocks that shifting supply curves cause.

Understanding how changes in the supply chain impact procurement allow businesses to take steps toward mitigating risks and staying competitive during market fluctuations.

Related: Navigating Supply Chain Risks: 4 Strategies And Solutions

What Is The Way Forward?

While the effect of inflation on the future and commodity pricing seems complex, there are steps you may take to mitigate those effects.

One step you can take is to get government support. Your government must prioritize investments in commodities even during economic challenges. Other solutions may include the following:

  • Continued innovation
  • Awareness and education
  • Technology optimization

The supply chain processes are both exhilarating and challenging, allowing experts to overcome obstacles and innovate. Businesses can navigate supply chain complexities and turn them into success and growth opportunities by optimizing processes, quantifying uncertainty, scaling operations efficiently, and addressing customers’ expectations.

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Barsha Bhattacharya is a senior content writing executive. As a marketing enthusiast and professional for the past 4 years, writing is new to Barsha. And she is loving every bit of it. Her niches are marketing, lifestyle, wellness, travel and entertainment. Apart from writing, Barsha loves to travel, binge-watch, research conspiracy theories, Instagram and overthink.

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