Economic pressure will demand 'dynamic' supply chains in 2013

2 January 2013

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2 January 2013 | Anna Reynolds

Supply chains need to be more “dynamic” in 2013 and should focus on risk management as they expand internationally, according to consultancy Crimson & Co.

Richard Powell, managing director at Crimson & Co, said: “The economic climate has continued to drive an emphasis on price reduction from suppliers to an extreme. The result has been that relationships are confrontational and actually work against collaboration rather than towards co-operation.”

Buyers’ continued focus on cost reduction as well as the weak European economy will mean smaller European companies will start to look to deal in markets outside Europe. This will also present new challenges, as supply chains adapt from being relatively local to international.

Risk management will be a bigger factor for companies than in 2012 as natural disasters have left businesses cautious, with supply chain professionals more actively exploring different sourcing options. Powell identified an increase in companies looking to save money from their logistics operations in 2012, particularly in the pharmaceuticals and energy sectors.

Powell added: “Against this cost cutting background, businesses are still being asked to respond to the ever-increasing pace of innovation. Innovation is vital for sales, and businesses are trying to find ways to manage the complexity this creates.”

He highlighted four impacts for supply chains in 2013; currency challenges; commodity fluctuations; political instability and the likelihood of natural disasters. He recommended businesses put risk management higher up the agenda, tailor supply chains to customer demands to boost competition and take a more holistic view of the supply chain rather than simply focusing on purchasing costs.

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