Like all of us at YF, we are sure that your thoughts are with those that are being impacted by the Ukraine crisis. We have been keeping track of a few ways to show our support, and wanted to share some ideas GOV.UK have provided too.
You probably also have plenty of questions around what this might mean for your business.
As a challenger brand, we know you feel particularly vulnerable to even the smallest shifts in the supply chain. And coming off the back of Covid-19, the conflict in Ukraine might feel like yet another overwhelming source of uncertainty.
As covered in Thea’s newsletter, it goes without saying that you and your teams will need to switch off autopilot and be prepared to make quick, responsive decisions in the weeks ahead. Events are changing every single day.
However, there are some proactive steps you can take to mitigate the impact on your business but first, you need to understand how you could be impacted.
Here are the three ways we know that the global supply chain will be affected by the crisis in Ukraine.
The cost of ingredients will increase
The conflict in Ukraine is not the only pressure on global commodity prices right now. We have also seen extreme weather destroy crops in Germany, Canada and parts of South America.
But with both Russia and Ukraine being significant commodity suppliers, there has been a big upward pressure since the invasion. Those commodities that will be affected look set to include: wheat, corn, barley and vegetable oil.
Energy prices will rise
With Russia being one of the world’s biggest oil producers, the war in Ukraine is already having a big impact on energy prices. This will have a knock-on effect on every part of the supply chain – and also on consumer’s basic household costs too, with price hikes at the fuel pump.
It will be harder – and more expensive – to move goods from A to B
There are already plenty of backlogs at European ports and the conflict in Ukraine is only worsening some of the bottlenecks we are seeing across the global food supply chain.
This will increase delays and push up shipping costs. There are already reports that some ocean cargo rates could triple.
Now we have identified the major challenges, it is worth considering these five areas to minimise the impact on your brand:
1. Understand where you are vulnerable – and focus there
How reliant are you on commodities that could see price rises, for example? What are the terms of pricing in your supply chain contracts and how long is left on these agreements? How dependent are you on international delivery? Take a long look at your supply chain and understand where you need to focus
2. Set yourself up for agile decision-making
When it comes to making overnight changes to your supply chain ensure you have the structures in place to allow for quick decisions. Is there a clear process that everyone in the team is aware of? Is there clarity on the chain of command? Is there more than one person that can sign off a final decision?
3. Create a dialogue with your suppliers
Be in regular contact with your suppliers to understand how the situation is changing on the ground. What cost increases are they anticipating? What delays are they experiencing? Make sure you have a good grip on what is going on at each stage of your supply chain, each day.
4. Consider new distribution plans carefully
In the current climate there is an argument for postponing big strategic changes, such as new distribution models or markets. Only you can know for sure what is right for your business but just pause and give it some thought before you push ahead with current plans.
5. Get the right advice
This situation will change from one day to the next and working with the right experts is critical. Are you getting the right management information on your business to make informed decisions effectively?
Do you need help?
It is an incredibly difficult time to be a small business right now, but our Supply Chain Team can help you in a multitude of ways. From helping you to find alternative manufacturers, aisst with customised planning tools and support or in-house data processing.
If you would like to discuss with our team about how we can help you, contact us today.