Annual review 2022
More volatile supply chain
Strong fluctuations in both prices and volumes of products and supplies made 2022 a difficult year in terms of supply chain management . This has given rise to historic challenges , marking a new era in Europe :
“ It has been a toxic cocktail for many companies . First , they were challenged by an acute shortage of supplies caused by macro-economic changes such as China ’ s strict COVID policy and , later , the war in Ukraine . And when supplies finally arrived , inflation hit , tying up a lot of cash in inventories ,” says partner Tyge Rasmussen , who assists business clients on a daily basis with advice on both purchasing and sales agreements in the supply chain .
and internal processes will have wide-reaching implications . While we may hope for greater stability in the coming years , the complexity and demands on corporate supply chain management are increasing ", Tyge says .
Read more about our ESG advice on page 34 .
The challenges have had a major impact on companies ' reputation and financial performance . In response to the new situation , many companies have focused on maintaining the liquidity required for their day-to-day operations and increasing the flexibility of their supply chains . A focus which Tyge expects to be key also in 2023 :
" I expect 2023 to be characterised by greater stability , but the risk of escalating sanctions between China and the US could have consequences for the market as a whole . It is therefore important to have a flexible supply chain , including the ability to adjust volumes and prices , and to use multiple suppliers to spread one ’ s risk . It may come at a cost , for instance if you decide to use multiple sources of supply and / or suppliers located closer to you . This means that you need to have the right clauses in your contract , but it may be worth the “ risk premium ”, because you get agreed agility ”, he argues .
New opportunities – more requirements Further to the multiple supplier and agreed agility strategy , Tyge expects increased focus on strategic acquisitions , particularly in the business-to-business industry :
" Strategic acquisitions may be used as a means of addressing supply chain challenges . By acquiring competitors or suppliers , companies can strengthen their position , get direct access to necessary raw materials or components , and diversify their business into new areas ", he says .
Why is focus on supply chains important ? Having efficient supply chains is extremely important , because it may lead to lower costs and higher customer satisfaction and ensure a competitive edge . On the other hand , inefficient supply chains can result in delays , supply shortage , and lost sales , which may harm the company ' s reputation and financial performance .
In addition , the increasing focus on ESG , including new legislation and requirements , will have a major impact – not only on the individual business but on every step in its supply chain :
" While several legal aspects continue to affect the area , there is no doubt that ESG and the requirements expected to be imposed across supply chains , business partners ,
Tyge Rasmussen Mob . + 45 61 63 54 48 trm @ kromannreumert . com
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