Protecting Your Supply Chain

Minimizing the effects of shadow inflation

The word ‘inflation’ has been tossed around a lot recently by various world governments and shouldn’t be very unfamiliar of a concept to most of us. Recorded measurements of consumer prices are rising at a faster rate than they have in years.  

What is shadow inflation? 

Shadow inflation is even more corrosive than ‘normal inflation’. It refers to cases where despite paying the same price for something over time, the quality or quantity of the said good or service diminishes. To put it very simply “things get worse.” This can refer to anything, from the services offered by a hotel stay, down to the number of chips in a packet of Lays. 

Prices are rising inordinately across some sectors. For example, U.S. consumer prices jumped 6.2% in October, the biggest inflation surge in more than 30 years. Ocean shipping has borne a significant brunt of this. Shippers are paying extortionate prices, whilst delivery times are increasing multifold and ports are blocked and backed up in almost every major global location.  

The problem here is that ocean shipping is a necessity for many major business. This means that when demand outweighs supply, prices will inevitably increase, since there is no alternative. According to the UK consultancy Drewry, global container rates will increase by over 120% this year, on average, as compared to 2020. Meanwhile, Sea-Intelligence, a consultancy based in Denmark, reported a few alarming statistics: 

  • In August of 2021, global carrier schedule reliability fell to an all-time low of 33.6%. 
  • In August of 2019, reliability was nearly 70%.  
  • Average delays for late vessel arrivals in 2021 is 7.57 days, nearly double the 2019 figure.  

Ocean shipping rates is probably the most extreme example of shadow inflation, but it’s affecting industries everywhere, like hospitality and travel. 

Protecting Your Supply Chain 

There are obviously certain elements out of our control when it comes to protecting our own business’ supply chain and minimizing costs, but there are certain things you can do to curb the effects of the tumultuous world markets on your operating margins: 

  • Utilise or invest in data analytics and technology 
    Digitalisation is rampant throughout all industries as we pivot towards a future based on cloud computing and machine learning. Leveraging data analytics can help anticipate and even predict potential hiccups in supply chain operations. Consider expanding your technological capabilities so your company is better equipped to react accordingly should difficulties arise.  
  • Maintain an adaptable business model 
    This point can’t be understated! While it’s obviously very difficult to maintain flexibility throughout your company’s operations, having contingency plans will be crucial to navigating the current ever-changing nature of supply chain. This could mean everything from simply keeping an open mind when it comes to the adoption or implementation of new CRM systems, or when discussing the very foundation of your company and its motivations.  
  • Focus on your team 
    Building a team that you trust implicitly is paramount to the success of your business in these uncertain times. Widening your candidate pool and re-evaluating your interview processes can be the most influential methods of ensuring a diverse, yet cohesive staff unit. The consequences of not doing so could result in struggling to fill positions in an already shrinking talent pool.  

This is where we at Proco Global come in. Our business model is designed to build and cultivate a global Supply Chain E2E network of professionals. We know that there’s a massive shortage of talent, but the right talent is still out there! If you’re having trouble designing and implementing your vision of the future, get in touch with us to discover how we are currently assisting different clients and candidates to find the perfect match in these challenging times when it comes to highly specialised roles like Procurement Logistics, Logistics Excellence and Supply Chain E2E Planning. 

Be sure to follow us on LinkedIn to stay up to date with all the latest trends and developments taking place across the end-to-end supply chain. To get in touch with me, click here 

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