cross border movement of cargo . Huge fluctuations in multi-currency transactions threaten realisable cash values out of the supply chains . Just how agile or nimble can the supply chains be to survive this tax threat ?
Competitiveness and value preservation are increasingly becoming more dominant areas of focus . Can anyone find opportunities and ways out of this ? Is it so hopeless ? Underperformance on the fiscal policies and unstable policies can wipe out businesses .
This directs the strategy radar to a shift that supports local production and substitution to use of local raw materials and other production inputs . This assumes that local production capacity is growing and there is resilience to such negative macro forces . To complicate this further , consumers are on the other hand hit by very high costs . Consumption appears geared towards a survival mode . What business can thrive in this environment ? Are we likely to see growth in humanitarian type of logistics ?
It is still possible to create sweet spots in hard times . This differentiates who survives or gets wiped out . This is the hard fact . One can rethink and recreate new backbone for respective supply chains even when the lights are on survival mode . In the lowest level of vulnerability , creativity is the only way out and up . Step in the gap . Covid lessons are still fresh - and can be used to flip the situation .
Let us take the pulse of the key infrastructural requirements for effective logistics industry . We are talking about the physical assets that support this . This looks at state of infrastructure like expressways , roads , rails , air , and ports and energy installations which are a critical interplay in multimodal transport systems .
When economies are on survival mode , it is likely to ignore investments to support expansion or even maintain current investments . Expansion gets sacrificed . Embarrassingly , we have seen the sorry state of critical infrastructure like leaking roofs of leading airports . Physical assets require all sorts of continuous maintenance . Preventive maintenance is the most critical one . Where corrective maintenance is due , it must be done on time and satisfactorily .
Perception is reality . This is a pointer to what a sorry state the overall logistics infrastructure could be in . Governments ’ role in creating physical assets that support smooth operations of logistics cannot be gainsaid . When this doesn ’ t work , and
coupled with economic down time , the results can only be a breakdown of the logistics backbone . Sadly , the recuperation process is equally painful and takes a very long time to get it back on track . The reality of this perception here is that Governments are still the critical backbone in logistics . They determine the state of the macros as well as the enabling environment for supply chains to thrive .
The total cost of doing production has cost of energy as a critical component . Local pricing of energy in Kenya includes foreign exchange adjustments and of course taxes sit pretty well in these bills . While the foreign exchange regime remains too volatile , investors have to think through this carefully . In the short term , it does not look great .
Globally , there is push for green goals with net zero positions . How do we get to this level of substituting expensive and nonpredictable sources of energy ? Green goals are very important . The only hope of giving back to mother nature , but not when the backbone is in an extremely compromised position . Some short-term sacrifices and substitutions might be made .
However , going green is not an alternative that can be avoided . Leaders in supply chains must be fully aware that this can re inject life into the backbone of logistics . If it means getting out of some businesses for the overall good , let it be . We must protect planet earth while doing business sustainably . Supply chains should not lose sight of green opportunities , that include favourable financing options .
Let us remember that what gets on the spotlight must drive action . This should influence the right behaviours that must enable supply chains to perform . When the core doesn ’ t hold tightly and together , thriving becomes endangered .
It matters a lot that someone should react to this . Let this provoke action . And let it be , action in the right direction . As it is , the fundamentals for executing effective supply chains that support growth of businesses in a sustainable way continue to be eroded . Something must give way .
CPA Michael Nzule is the Finance & Strategy Director of Mitchell Cotts Freight Kenya Limited . He holds an MBA in Accounting with specialization in Marketing , and a Bachelors of Commerce ( Accounting Option Hons ) from the University of Nairobi . He ’ s a member of ICPAK . Views expressed in here-in are personal . You can commune via email at : Mikemaithyanz @ gmail . com .