Suppliers are 'falling short' on meeting post-Covid demands

16 September 2022

Global supply disruptions have created ripple effects across the globe and procurement teams should expect challenges to last “well into next year”, an expert has warned.

Disruptions following the Covid-19 pandemic left “an aftermath of new challenges”, according to Maggie Slowik, global industry director of software company IFS. 

Slowik’s comments come as UK inflation eased in August from 10.1% to 9.9%. Economists had expected inflation to increase but a fall in prices for fuel caused inflation to marginally ease. 

Slowik told Supply Management: “The current disruptions may be slowly starting to settle down or even normalising, but it is unfortunately leaving behind an aftermath of new challenges. Such as change in the demand patterns – suppliers are falling short when it comes to meeting post-Covid demands. In addition to this, lockdown measures in China and geopolitical developments are putting further strains on delivery times and transportation that are felt globally.

“While there are certainly positive signs, the change in the tides should not be taken as a promise to return to life as it was. The disruptions that occurred were on a global scale leading to many ripple effects across the globe, especially in economies that have arguably less bargaining power, but have a larger manufacturing footprint.”

Consequently, disruption for procurement teams will “likely continue well into the next year, and maybe beyond if the situation is left unsettled”.

Russia’s war in Ukraine is continuing to put pressure on the free flow of goods and Slowik said: “We don’t see [this] changing anytime soon.”

She said “increased pressure is being placed on procurement and supply chain” as the function is left to lead on net zero targets. “This is disruption that we can expect to see continue, especially as some countries have pledged to reach this early as 2030.”

Procurement teams should improve their supplier and product mix to mitigate ongoing disruptions.

This should not only include strategies to seek alternative suppliers as a contingency to make sure that there is a continuous supply for raw materials, she said, “but by having a detailed overview of the supplier mix, procurement teams can ensure their upstream supplies capacities are accurately calculated”.

Meanwhile, research found 64% of supply chain leaders said ensuring supply continuity has increased in priority since Covid-19. The research further found 55% of procurement teams plan to collaborate with more suppliers to ease disruptions, according to software company Ivalua. 

The report, Ensuring Supply Continuity During Turbulent Times, found the top barriers to ensuring supply continuity were an inability to effectively assess the overall risk across suppliers in a single category (30%), inadequate systems for defining and triggering responses to disruption (26%), and insufficient means to effectively assess the risk of individual suppliers (25%).

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