Articles
November 14, 2022

Inflation Presents New Supply Chain Ripple, but Resilience, Agility are Leading Companies to Smoother Waters

The bullwhip effect is a supply chain phenomenon that typically describes how small fluctuations in demand at the retail level can cause progressively larger fluctuations in demand at the wholesale, distributor, manufacturer, and raw material supplier levels.

Company leaders are responding to higher inflation by increasing supply chain resilience with better visibility, predictability, and flexibility. TUNE IN NOW to the latest monthly supply chain virtual series hosted by global supply chain leaders and members of the Supply Chain Automation LinkedIn Group. Hear from supply chain expert panel members, Bruce Richardson, Chief Enterprise Strategist at Salesforce; Mike Landry, CEO at ketteQ; Cy Smith, SVP, Business Development at ketteQ, and special guest Harshad Kanvinde, Global Practice Head, Supply Chain at Slalom as they share their insights. Learn more about how supply chain operators are assessing exposure to inflation by analyzing and targeting key elements of their bottom line and identifying alternative, lower-cost suppliers and responding to higher inflation by increasing supply chain resilience with better visibility, predictability, and flexibility. It's time to prepare for 2023.

For the last three years, supply chain companies have been working under the bullwhip effect and the whip has been lashing all over the place, said Harshad Kanvinde, who recently led a panel discussion on how businesses are managing the latest supply chain disruption – inflation.
Harshad Kanvinde, Slalom

The bullwhip effect is a supply chain phenomenon that typically describes how small fluctuations in demand at the retail level can cause progressively larger fluctuations in demand at the wholesale, distributor, manufacturer, and raw material supplier levels. 

While some of the most intense disruptions driven by the COVID-19 pandemic have settled into everyday norm for supply chain operators, industries are still struggling and worries remain high, explained Kanvinde. There are still shortages and inventory buildup, commodities are short and there are pockets of soft demand, on top of uncertainty around consumer discretionary income.

Inflation Battle Tips

The U.S. Federal Reserve is in a delicate dance now, balancing rate hikes with its attempts to push back rising inflation. Meanwhile, a persistent rise in prices for consumer brands, along with fears of a recession are shaking consumer confidence.

It is impossible to predict the future, and it’s better to let that go in favor of focusing on the basic fundamentals of good businesses that can keep supply chain operations running as smoothly as possible, said Kanvinde. Focusing on what capacity is on hand, whether there is good visibility into the supply side of the house, and where supplies coming from, for example, are key to securing the resiliency needed to manage through disruption.

Yes, it’s important to keep an eye on inflation, but companies should be spending less time predicting the future and more time focusing on all things within their control, added Kanvinde.

Inflation is not new, noted ketteQ SVP of Business Development Cy Smith. More surprising is that consumers keep spending, even in the face of inflation hikes. But troubling is the number of companies that seem not to be learning or changing despite repeated disruptions that have wreaked havoc with forecasting, inventory, and supply chain strategy.

Persistent Disconnect

In the past few years, during the pandemic, companies who invested in agility were much better able to weather disruptions. Building speed in responsiveness and decision making have been essential for supply chain operators.

There is still a disconnect inside many companies between the people and processes that create supply chain agility. Leaders should be asking how their company can make the front-line workforce more capable of using the insights that are being collected internally from being more in touch with supply and demand, as well as inventory planning, for example.

Traditionally there was little interaction between the supply chain side and the CFO, but in the last six months there has been more CFO involvement and cross-leader discussions around supply chain strategy, processes and needs.

Also encouraging are more signs that companies are more frequently scenario testing. Pricing elasticity, for example, can be tested by analyzing how demand reacts to various pricing changes. It goes back to AI and ML and understanding the necessity for demand sensing and building a muscle for that, noted Kanvinde. It is both a process and a mindset shift.  

Companies also recognize that there is often no downstream accountability for using new processes, products or strategies created at the VP level. The use of historical demand data is no longer reliable, but with cloud-based supply chain planning solutions, it has become much easier to run informative experiments. Data collected from those experiments and the strategies built around that data must find a home down the chain of operations.

Signs of Solutions

Among industry giants, there are now notable examples of companies who are willing to disrupt the norm and develop novel strategies to stay ahead of supply chain snares.

All eyes in the retail industry are trained on American Eagle, which decided to take control of its supply chain, and take over its transportation and fulfillment by buying up a transportation startup and a last-mile fulfillment business.

Supply chain operators also recognize that staying agile and resilient does not start and end with one software package. System-wide solutions and partnerships with platforms like ketteQ are giving companies the investment options they need to build the visibility needed to go forward with confidence, said Kanvinde.

The level of uncertainty for supply chain leaders remains high and that has been ongoing now for the better part of three years. The silver lining is that this is now the norm and the changes and challenges, and curve balls are happening at a faster rate, and yet resiliency is automatically built in.

As gloomy forecasts continue companies are waking up the realization that predicting the future may not be possible, but enhancing the constants of good business is always on trend and now, more than ever, there are a host of solutions that can aid in creating a business and supply chain ready for 2023.

If you are ready to better prepare for the year ahead, ketteQ is ready to be a partner. Reach out today to set up time to talk through all the ways the right software and planning solution can help create the visibility you need.

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Nicole Taylor
Director of Marketing
About the author

Nicole has over 17 years of marketing experience across a wide range of industries including SaaS, Advanced Manufacturing, Hospitality, and Non-Profits. She is a data-driven, detail-oriented marketer adept at developing and executing all aspects of marketing to optimize and leverage visibility to drive growth for brands.

Before joining ketteQ, Nicole worked with ZVerse, an advanced manufacturing company that reached #67 on the Inc. 5000 list in 2021.