Inflation continues to impact UK consumers, with the Consumer Prices Index (CPI) recently hitting 2.5 percent, higher than the Bank of England’s two percent target, sparking concern among savers. Rising cost of living issues are a global concern and the IMF has examined what actions central banks across the world may be forced to take.
“In truth, there may never be a return to ‘normal’, and international supply chains must adapt for a long period of volatility.
“Tradeshift’s quarterly research highlights the stop-start nature of recovery around the world.
“For example, in China – the first country to go through the pandemic – supply chain transactions recently dropped by 22 percent, the second quarter in a row that activity levels have fallen by a double-digit margin, largely the result of supply chain bottlenecks.
“Modern supply chains – including those based around ‘just-in-time’ – are designed for maximum cost-efficiency but they lack the agility to respond to profound and fast-changing situations like Covid or other global crises.
“This leaves businesses vulnerable not just to a slump but also to sudden or non-uniform economic recovery, as Tradeshift’s data illustrates.
“While everyone from the IMF to mom-and-pop stores hopes for a swift recovery, it’s clear that supply chains will have to change.
“Digital technology must play an increasingly central role, for example by unlocking faster, more predictable cash flow, better access for diverse suppliers and increased optionality in the event of disruption.”
Fortunately, Mr Lanng went on to highlight consumers may be able to actually stem inflation themselves going forward, so long as they are prepared to do a bit of homework.
Mr Lanng concluded: “Inflation has many causes and there is no single solution. But one of the key contributory factors to the rising price of everything from cabbages to cars is, ironically, the systems businesses have created in the last 30 years to reduce costs.
“There’s never been much that consumers can do about inflation. Yet that might be about to change. We are seeing the rise of more informed, more ethical shoppers, and that could help provide a solution.
“The same technological approach that ensures the provenance and sustainability of goods by tracking them through every stage of the supply chain also brings the agility and optionality that enables businesses to respond quickly to crises – by quickly onboarding new suppliers, for example. As consumer pressure on ethical and sustainability issues increases, it will help push businesses to explore the shortcomings of their existing supply chain arrangements.
“Every consumer wants lower prices, right up to the point when they can’t get the goods at all. With luck, businesses will learn from this and invest in technologies that enable them to build resilience, redundancy and agility into their global supply chains, so we don’t have to face shortages and skyrocketing prices the next time we face a crisis.”