Supply Chain
2024 Perspectives And Reset
By Michael Nzule
As the year drifts to a close, it is time to pause and reflect. The past is always filled with experiences. These experiences vary from most painful to pleasant ones. The painful ones create the nudge to forget them. But we should never forget the lessons. The pleasant ones remain in the wish list for being re played over again. From the spectrum of the experiences, and gazing through the crystal ball, the world of possibilities of risk mitigation becomes clear. Let us now walk through what 2024 year was and place it in the perspective of the supply chain landscape.
The supply chain model has many variables. In this engagement, we look at the variables that have remained constant in the year under review. At the start of the year, global drivers including the Russia- Ukraine war, the Middle East conflict and global recession were expected to continue impacting the performance of global supply chains. Economic instability still is the top factor impacting supply chain. For global supply chains to thrive and perform well, consumer demand, supplier performance and availability, pricing are the next important variables. Stability of supply chains or otherwise is further impacted by certainty in linking the flows, both from supply and demand sides.
Closer home, the Kenyan scenario got complicated. Some pundits had predicted stability in the economy at the start of the year. After all, the Kenyan economy has been known to re bound after every cycle of elections and with new regimes settling down. And this might not have been an exception.
However, the year started with accelerated deprecation of the shilling to the global currencies. There was panic. And as this was being fixed, unexpectedly and spontaneously the country was faced with unrest, now known as Gen Z uprising. This disrupted the whole economic, political and social set up in Kenya. For a month, the country was forced to rethink and re set ways of engagement with the citizenry. The Finance Bill 2024 was shelved, and the government had to pause.
While this was going on, the rest of the world was moving on. The competitiveness of Kenya got challenged and is still challenged. Transit goods movement and the Port of Mombasa, which is a critical cog in logistics performance in the region is reported to have started losing competitiveness, with new routes being pursued. It is reported that the Port of Dar reacted to the high-cost regime of Mombasa and offered preferential trade terms to its users. This is despite the unmatched capacity and efficiencies of Mombasa Port. Costs, and by extension pricing reared up the ugly side. This is still the most critical variable, that influences the performance of the supply chain model, in the Eastern Africa region. There is an urgent need to rethink and reset this, to regain regional competitiveness.
Global geopolitics and trade uncertainties influenced the availability of raw materials, which impacted on the costs of sourcing, freight and movement through volatile regions and source ports. This had a great impact on commodities( including crucial food stuff and raw materials), oil and choice of routing of vessel movements. Route planning and execution were the other factors that impacted cargo movements. Regulatory changes through different territories, countries and economic regions accelerated the uncertainty in global supply chains.
As the year drifts to a close, it is time to pause and reflect. The past is always filled with experiences. These experiences vary from most painful to pleasant ones. The painful ones create the nudge to forget them. But we should never forget the lessons. The pleasant ones remain in the wish list for being re played over again.
Let us turn our focus to the consumer. Mostly, all supply chains serve a final customer or consumer. The consumer purchasing power continued to be eroded. The local context has deteriorated. While reported official inflation in Kenya is very low, this has translated to almost nothing in empowering the consumers, whose real disposable income and purchasing power continued to be depleted.
The sure and certain variable, besides death, has been confirmed over and over in the year. Taxes. The tax regime has continued to squeeze consumers. The country now has the highest level and
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