The current state of the supply chain market
- So many aspects of our lives depend on the good circulation of the supply chain market. Since the start of the pandemic to the current date, It has been a very difficult times for businesses around the world because of the backlog in the supply chain. Many containers with goods were held at congested ports with the uncertainty of when they can be forwarded along. This caused a lot of delay in the deliveries, negatively affecting the world trade system. There are also many geopolitical aspects like for example the war between Russia and Ukraine that made a huge impact on the world trade system and caused supply chain crisis. According to RetailNext 2020, 28% of the global retailers tried to find alternative sourcing options due to supply chain issues. Inflation has hit in many countries and already shows signs of growth. According to Bloomberg Economics, in the U.S., it has reached 5.4%. According to the National bureau of statistics in China, China’s annual inflation rate went up to 2.7% in July 2022, compared to the 2.5% in June.
China and the supply chain crisis
As is the rest if the world, China is also hit by the chaos of the supply chain and Chinese economy has experienced the slowest quarterly growth since the start of the pandemic. There were strict restriction put to measure because of the pandemic which resulted in closing down some of the major China’s hubs in Shangai, Shenzen and Tianjin. The businesses in China are being very inventive in finding different ways how to get out of the supply chain crisis. Many platforms in China like for example Beautysourcing as a platform to gathering all qualified wholesale beauty suppliers are fast accommodating to meet all the necessary requirements to run the beauty market as smoothly as possible. Many businesses are trying to improve their logistics, increase their transport capacity, relocate their production, straighten their regional pacts and prioritize their digital infrastructure in order to survive the crisis. Lots of shifts in the way of how business was dealt in the times before and after the pandemics took place.
Overcoming the supply chain crisis
The most important thing that businesses need to keep in mind during crisis in the supply chain is that you need to make sure you still have suppliers and enough parts and materials to maintain production lines. Businesses need to be careful when looking for alternative suppliers because very often the market is overflowing with fakes. Researching and finding out your suppliers financial health will help you make decision better and sometimes it will mean that you would have to support them in order to be able to get your goods from them.
The pressure put on the businesses to run their production smoothly, will have to involve a lot of facing with weakness and strengths and making their supply chains more resilient.
The logistics will definitely need to be improved and the competitors need to be closely observed because this will give the businesses a better idea in which direction the supply chain market is moving. The structural changes, analysing the market and sometimes completely reorganising their production are all something businesses would need to consider and to be prepared for.
Because of the political tension between USA and China, Russia became a preferred route for the Chinese freight carriers. Another factor was that this route involves less cost. But when the war between Russia and Ukraine emerged, China started prioritising the South Asia and Caucasus route.
The supply chain crisis will not he resolved overnight, but with good strategic thinking, analysing and predicting this market can become more resilient in the times to come.