David Young - ET2C International - Page 11 of 11

The growing market for health and wellness products for pets

Industry Insights / David Young / Pet, pets

The growing market for health and wellness products for pets

Another of the many side effects of the disruption of the covid pandemic has been the increased adoption of pets as family members.

A recent GfK survey of 27,000 households showed that cat and dog penetration stands at 33% and 23% globally. Peaking at 57% Cats in Russia and 64% Dogs in Mexico.

As a consumer base Cats and Dogs are growing rapidly creating a huge increase in market side demand.

Pet parents driving incremental market growth

Many pet owners increasingly see themselves as pet parents, completely integrating their pet into every aspect of family life. Impacting a growing number of family decision making. From where to go on holiday to restaurant selection.

The growth of pet ownership and the effect of widespread lockdowns in response to the global pandemic has creating the environment for an acceleration of the humanization of pets. Creating a huge driver to build both the breadth and depth of the pet market.

Creating huge opportunities for retailers, wholesalers and ecommerce operators to serve their customers with an increased and more diverse range of pet accessories. Ensuring you have the right range of products for the evolving needs of both pet parents and their pets.

In a recent survey of over 2,000 pet owners 47% prioritised their pets health over that of themselves. Clearly defining the driving force of the growth in pet supplies in the coming years.

Top 5 Pet product categories to watch in the next three years

1. Supplements

As pet parents humanise their pets further they will seek the same preventative supplementary treatments they use themselves. We will increasingly see the rise of sales of supplements for hip and joint inflammation, vitamins and probiotics for improved gut health.

2. Pet wipes

Constant washing of your dogs and cats if they get muddy can lead strip their coats of vital oils. Wipes are designed to quickly and easily clean their paws. Without using loads of water and creating huge mess.

3. Oral hygiene

Our humanisation continues in the growth of dental products for our pets. We all know the importance of regular care and treatment of our teeth and gums to ensure longevity. As pet owners we are increasing looking for the same support for our pets. Dental products from toothbrushes to dental treats to clear plaque will continue to grow quickly as more brands launch products in this area.

4. DTC

Online speciality pet stores are benefitting hugely from the wider humanisation trend. In the last year six major DTC pet care brands launched in the US and the UK. The well-established convenience and range breadth of DTC suppliers has allowed owners to expand their repertoire of pet products with ease.

5. Environmentally friendly products

The humanisation of pets and their needs extends more widely to include the environmental impact of the product pet parents are purchasing. From bed and baskets to food and poo bags consumers are looking for the same environmentally positive choices they expect in their products.

Conclusion

The market for pet products will continue to grow at a huge rate driven by increased numbers of pets in home and their humanisation by pet parents.

The global pet products markets is expected to exceed $232b by 2030 creating a huge growth opportunity for retailers and wholesalers to focus on their range development.

Range development will be crucial to ensure you are aligned to category growth opportunities in the next few years.

As one of the leading global sourcing companies we are here to help you to rapidly build your pet accessory range with our range from Basket & Bone. The quickest way to ensure you have all the critical categories covered in your customer offer..

Call us now at Contact@et2cint.com

The growing market for health and wellness products for pets Read More »

blank

Sourcing Agility

Industry Insights / David Young / Agility, disruption, sourcing

Agility as a key part of your Sourcing Strategy

World trade continues to ebb and flow from the fall out from the Pandemic. Companies and markets are left dealing with the continuing supply chain disruption. The ongoing conflict in Ukraine, China’s ‘Dynamic Covid’ Policy, supply and demand imbalances in commodity markets and the backlog of containers at ports around the world all contribute to the inflationary pressures on consumer pricing and stock misjudgements (shortages and excess).

The future outlook for risk and disruption continues to be uncertain. As the World Economic Forum Global risk report 2022 suggests. Their view is we should expect increased volatility disruption over the next three years. Creating further global trade turmoil and supply chain disruption.

What does this mean for Global Sourcing Strategies?

Global disruption, whilst creating huge pressures, also creates opportunities for companies and brand owners who can identify opportunities and adapt swiftly to the new paradigm.

Dealing with disruption will be balanced with the need to deliver business efficiency and increasing environmental challenges such as GHG emissions reduction in wider supply chains.

Efficiency and resilience will be vitally important to compete effectively through current and future disruptions. Agility to deploy these two elements will build significant competitive advantage.

Re-shaping business process to deliver increased effectiveness.

Demand tracking to future change anticipation and planning

Process silos to integrated business planning

Information hoarding to rapid sharing for better decision making

The need to integrate environmental measurement and reduction whilst securing improved and more effective sourcing strategies will increase the need for tangible partnerships within supply chains. Building working relationships with strategic suppliers from within current supply chains and identifying near shoring opportunities will build in additional ‘flex’ into your sourcing strategy.

Transactional relationships to partnerships for growth

Keys Steps to Build Agility and Increasing Competitive Advantage:

1. Focus on efficiency through data management and lean business process

2. Build strong partnerships inside current supply chain with strategic suppliers

3. Identify new partnership opportunities for sourcing in new jurisdictions

Building strong partnerships with a focus on agile growth planning can be accelerated by utilising additional expertise to support your growth ambitions.

Whatever your needs, we are here help you source from global sourcing markets. As a leading sourcing partner with a presence on the ground in multiple markets, we can help build the agility and resilience that you need. For more information, please contact us at contact@et2cint.com

Sourcing Agility Read More »

blank

Supply Chain Resilience: A Step Change

Industry Insights / David Young

Supply chain resilience over the past 3 years has been the subject of many column inches, but what does this mean to companies on an operational level?

Overview

Supply chain resilience addresses (or should at least) some of the disruption to global markets that has been seen these past years. With more frequent supply chain shocks, which are of increasing severity, the ability for companies to mitigate these risks will be important given the adverse economic headwinds that are building in Western markets.

Supply chains that reach across continents and Oceans are already complex. Overlay these with the disruption and inflationary factors that are now evident the world over, and it just got a lot more complex. But for ‘Product companies’ (retailers, wholesalers, distributors etc), the supply chain is an integral function of the business. Without the suppliers, there are no products. And without products there is no business.

A Strategic Function

Consequently, CEOs across the globe are increasingly focusing their attention on their supply chains and their impact and implications. Sourcing is being recognised as a critical function in the delivery of business strategy. Whereas the traditional focus was on Price, Quality & Service, this triumvirate has now been also coupled with Resilience, Agility & Sustainability.

These new challenges are forcing an intense focus on supply chain priorities and team structures and responsibilities. This encompasses both the relevant expertise and knowledge to leverage one’s sourcing capability as well as the necessary market coverage.

Future Proofing:

The business need to navigate a robust and resilient pathway through these dynamic events are focusing attention on the any sourcing function. Supply chain resilience ultimately means building capability for a plan B and plan C, and maybe even plan D. But unlike the past where most supplier matrices focused solely on the China market, these options will likely straddle multiple markets, which further overlays complexity.

Whilst the need to ensure quality product that is delivered in good time remains the same. The traditional (sometimes obsessional) focus on price is now having to be balanced with the need for resilience and visibility of supply (i.e. some products are better than none!).

McKinsey in their recent report on supply chain resilience, describe a scenario where supply chain management becomes increasingly complex in the near future to respond to new and divergent demands. As the World economic Forum risk register suggests, the likelihood of further events impacting the world and so business are highly likely.

Resilience Defined

Resilience is defined as ‘the capacity to recover quickly from difficulties; toughness’. In the current and future global environment, it will be essential that the ‘supply chains’ are resistant and can recover quickly given the importance of identifying the right products and getting them to the consumer in the most cost effective and efficient manner.

In the context of global supply chains and the sourcing function, the key areas of focus in building this resilience should be:

Partnerships – This should not be underestimated. We have mentioned this ad nauseam over the past couple of years, but long term relationships with suppliers, who share the same goals, will build in flexibility and allow for enhanced resilience through the ability to be creative with solutions as required.
Supplier rationalisation – In line with the first point, a tighter network of supply partners will only help with volume, price points, and commercial opportunities.
Market coverage – Having multiple sourcing jurisdictions where you have onboarded suppliers will negate any regional disruption. Ideally, there will be supplier partners who you can work with in multiple markets across the same product categories as long as volumes allow this. In addition, thinking through how you access these markets on the ground and manage your suppliers.
Predictive Data – Building the capability to better predict, prepare and respond to changing needs. This should be encouraged by giving prominence to sourcing or buying at Board level.
Sustainability – There is the ever pressing need to deliver sustainability commitments, which will also fall on the shoulders of the sourcing function. In this sense, resilience is seen in the context of viability and the ability of the suppliers to meet the company’s needs (and those of the consumer).

Summary

The World Economic Forum predicts that the World will have to deal with a range of challenges in their 2022 risk register. The signs are already there and commentators are pointing to the economic storm clouds building on the horizon.

For companies to recover and build a future of robust growth, greater emphasis and investment needs to be given to the role of the sourcing/buying function. As the role of Sourcing/Buying Director expands to become a central part of strategic planning and delivery, the old transactional approach to supply base management will have to be renewed. This needs to happen to build the resilience required form companies to perform over the medium term.

Whatever your needs, we are here help you source from global sourcing markets. Our solutions can help build the resilience that you need. For more information, please contact us at contact@et2cint.com

Supply Chain Resilience: A Step Change Read More »

blank

Global Trade in Turmoil

Industry Insights / David Young / Covid, global trade, global war

Global Trade has already had a challenging 2 years but with further macro-economic shocks, a War on the edges of Europe and Omicron arriving in China, what are the implications?

Overview

Global trade has certainly had a bumpy ride over the past couple of years. Supply chains, particularly out of Asia, are snarled up and this has had a dramatic impact on freight rates, commodity prices and product supply.
The War now in Ukraine – an abhorrent stain on modern humanity – is having a further impact on raw material supplies particularly with Eastern European manufacturing. The interconnected networks of raw material suppliers have been disrupted by suppliers shutting down in Ukraine but also the supply of oil, gas and other raw materials (such as Nickel) out of Russia has now been sanctioned for most Western societies.
Global trade is now staring Covid, War and inflation in the eyes… and it’s not a good place to be.

The War

Aside from the tragic human impact of the invasion, the impact on supply chains is significant. We have spoken over the past couple of years of the need for ‘flex’ and resilience being built into supply chains. The ability to move to other markets and leverage manufacturing hubs that de-couple from China’s vast manufacturing capacity (if that’s possible in certain industries) helps mitigate risk.
A part of this resilience was to leverage ‘near shoring’ as one aspect of a company’s sourcing strategy. Specifically, with regards to European manufacturing (Eastern Europe and Turkey), the war is having a detrimental impact on these markets.
We were at a factory recently, 50 miles north of Izmir on Turkey’s Mediterranean coast that manufactures industrial pressure vessels to be used in agri-business and food processing. The facility was cavernous and had the capability to manufacture these vessels to a high specification. Their immediate issue was that two of their steel suppliers were based in Ukraine and were now ‘off line’.
Similarly, Russia is one of the largest exporters of Nickel. A metal that is integral in the manufacture of stainless steel which has a broad application in many products from fridges, surgical instruments, vehicles and cookware.

Commodity prices were already high on the back of constrained supply. The War has just created an additional shock to the supply of raw materials and with higher energy prices, there is a genuine threat to the supply of many products that people use daily.

Covid in China

Two years since the start of the Pandemic, it looks very much like we are moving into a period of disruption within China as Omicron begins to take hold. Whilst Shenzhen is in ‘Lockdown’ and other large cities are also in various states of lockdown and testing, there is inevitably going to be disruption across the Chinese supply base. To what extent, it is difficult to predict but there is concern that with lower vaccine immunity and little or no natural immunity within the population, the risk of a broad spread is a plausible scenario. That said, we do need to take a step back point out the following:

1. The case loads in China are significantly lower than in ‘normalised’ markets such as the UK (China 7 day average 1,627 vs UK 109,624).
2. The Chinese have reacted very quickly and mobilized an army of testers to identify cases and get ahead of the spread.
3. Even at the beginning of the Pandemic, they were quick to implement protocols within factories to mitigate any further spread. It is important to the leadership that China remains open for business on the back of a successful Covid Zero Strategy.

It is currently the case that only limited manufacturing sites have been shut down whilst testing is undertaken. Vietnam managed to maintain some manufacturing sites in the South when HCMC went into an 8-week lockdown. Cities will of course be most vulnerable to outbreaks with higher populations.

The main initial challenge appears to be around transport to the Ports, which remain open. This is especially true where provincial borders need to be crossed. We would anticipate the authorities putting in place protocols to work around this (like drivers not leaving their cabs, PCR tests etc). Remember that Covid protocols have been in place for the past two years where local outbreaks have appeared so there are tried and tested methodologies already in place. The question is whether they can get ahead of the fast-spreading ‘Omicron’ variant.

The Impact

All of this is having an inflationary impact on everything. Further supply constraints have only lit a fire under already high raw material prices. Disruption at Ports will push up freight rates back up to levels that were seen at the end of last year. Global trade is entering an extended period of turmoil, that will require patience to work through. Some key takeouts:

1. The cost of living is increasing in most markets on the back of higher energy pricing, and Producer Price indexes are pointing to higher product prices (if not already in play).
2. Price stability at factories will be very difficult to maintain. Think through how you are negotiating on price and use different levers (terms etc) to make sure you have product supply.
3. Speed to market will be key. Decision making will have to be quick and decisive otherwise companies run the risk of struggling to get production made.
4. PARTNER with your suppliers. The only way that companies will be able to leverage their supply base will be to collaborate with suppliers.
5. China Travel will not open until the Covid Zero policy is dropped. 2023 is now at risk!

Summary

Global trade is in state of turmoil. Partner with stakeholders across your supply chain. Collectively, you will be better than acting alone or with the sole focus of self-interest.

We remain here to help our clients, and get the visibility required to make your supply chain work for you. For more information, please contact us at contact@et2cint.com .

We pray for all those that are currently going through hardship as a result of the War.

Global Trade in Turmoil Read More »

blank

COVID Update – China Market

Industry Insights / David Young / coronavirus, Covid19, sourcing

15^th March 2022

With Covid cases now on the rise in China (3,500 plus cases reported yesterday), the Chinese authorities have taken measures to contain the outbreaks in line with their Covid Zero strategy.

Over the past two years, this has been targeted to outbreaks and largely localised as a result.
Outbreaks have now been reported within large cities, including Shanghai, Shenzhen, Changchun and other key manufacturing centres.

As at last Sunday, the city of Shenzhen (17.5 million people) went into lockdown for one week so that all residents would undergo three rounds of testing. Shanghai has also locked down certain business districts as well as residential blocks to undergo targeted testing.

At this stage, there are no Port shutdowns, but inevitably there will be staff shortages or other related disruption that feeds into supply chains and the movement of goods to port both in the Southern Ports near Shenzhen and also Shanghai. Similarly, we would anticipate disruption to Manufacturers to the extent that they are within the targeted areas. It does remain the case that COVID protocols are in place in most factories, which will serve to slow the spread.

Due to these measures, ET2C’s offices both in Shanghai and Shenzhen have been temporarily closed for this week (14th to 20th March), but teams are working from home and we do not expect any impact to our service levels.
Should you have your own enquiries, please contact your relevant account manager or at our email, contact@et2cint.com

FOR IMMEDIATE RELEASE

COVID Update – China Market Read More »

blank

Containers: the outlook for 2022

Industry Insights / David Young / Containers, Logistic, sourcing

Containers are the lifeblood of Global Trade and the Pandemic has perfectly illustrated how important they really are. Now with Omicron still raging across multiple markets, what is the latest on global trade flows?

Overview

Containers are commonplace wherever you travel. Whether loaded up at a Port, on the back of a lorry on the motorway or sitting on a train carriage, they are an ever-present symbol of trade and the movement of goods. Introduced back in 1956, containers were a transformative catalyst for trade to become truly global by enabling cheap and easy ways to ship goods around the world.

The Pandemic disrupted the movement of containers around the world, which is much more a delicate dance that ebbs and flows with the seasons. Suddenly in April 2020, containers were not readily available where they usually are and there was a complete mismatch between supply and demand. For example, thousands of containers were being stored in warehouses by the UK Government filled with PPE, when usually they would be on their way back to the Far East in all likelihood.

The result has been an incredibly challenging year in 2021. Container prices on certain high demand routes went up by 6 times as demand for space far outstripped capacity. This was compounded with bottlenecks at Ports, labour issues, equipment shortages and carriers introducing blank sailings to re-jig container availability (or profiteer in some instances).

Containers – A Traumatized Sector

According to a recent survey conducted by Container xChange, the container industry is rethinking its strategy. In particular, 70% of respondents said that they have plans to diversify sourcing options and resort to holding more inventory. This is certainly the case, although there is still a broad resilience within Chinese supply chains that appears to have negated some of this migration out of China.

There is a further expectation that the industry is still downbeat about supply chain performance in 2022; 65% of respondents said that performance will either deteriorate further (11%) or remain the same (54%) in the year ahead. But this is also justifiable, the scars of 2021 are still very raw.

The container gridlock has definitely traumatized this industry and continues to do so. This has not been helped by shippers using boxes as storage, container line failures, inefficiencies in matching box owners to potential users, and longer transit times and port congestion that has made container rotation slower.
Ports in LA are still struggling to clear the backlog of container ships waiting off the Coast, although there are positive noises being made about this ameliorating into Q2 of this year.

Outlook for 2022

It is clear that the shipping bottlenecks have exposed one of the most serious threats to the global economy as it emerges from the pandemic: whether the worldwide traffic jam remains gridlocked or begins to flow again in 2022. If the bottlenecks persist, freight costs will remain high, space for cargo on ships will be limited and retailers and manufacturers will have to endure chronic delays. That could in turn fuel sustained inflation, prompt supply chain upheavals and accelerate the consolidation of shipping networks, fundamentally changing world trade.

The cost of shipping freight, as an example, into the US shows little sign of abating. It is true that there has been some softening of freight rates, but these may not be so much to do with supply constraints easing, but demand dropping around Chinese New Year (and higher stock inventories prior to the end of 2021). Across all modes of transport, record highs have been recorded based on year-on-year comparisons.

Looking across these different modes of transport, Bloomberg reports that there has been an 18.3% jump in shipping by truck and a 29% rise in Ocean Freight rates.

Delivering Inflation

More and more Central Banks are having to review comments made in 2021 that inflation was only going to be temporary. The reality is that inflation is now being imported in containers (freight rates and higher commodity prices would be built into the product landed cost) and if this has not yet hit the retail shelves, it is shortly about to only compound monetary policy decisions.

Blackrock,

the investment house, has recently pointed to a ‘new and unusual market regime, underpinned by a new macro landscape where inflation is shaped by supply constraints.’ They suggest that this was perhaps overlooked by the Mandarins setting looking at the cause of inflationary drivers. These have been predominately a result of supply constraints all along global supply chains. Whilst demand was high in certain sectors, production is always constrained by the weakest link in the supply chain.

To take the example of the Fashion industry, supply chains will continue to face disruption as a result of logistical bottlenecks, material shortages and rising costs, according to The State of Fashion 2022 report by The Business of Fashion and McKinsey & Co. There remain significant challenges around product and resource shortages as chocked supply chains and rising shipping costs undermine operations. Over recent months, numerous companies reported difficulties in managing inventory flows or have tied lower sales forecasts to supply-chain blockages. Inevitably, in response, many have turned to remedies that include more nearshoring, in-store supply stocking, and agile operating models designed to respond flexibly to change.

Summary

It is by no means a simple picture. The challenges of 2021 will persist, and supply led inflationary pressures will push up prices along the supply chain. The tentacles of sourcing operations around the world will adjust their reach to counter some of these difficulties but such decisions will need to be married with other important business decisions around sustainability, which will likewise drive strategy in 2022.

Trade will continue to flow. Containers will continue crossing oceans and landscapes. The question is whether the blockages of 2021 can be addressed (or more supply of containers delivered) to get Global Trade back on its feet.

At ET2C, we are already working with our clients across multiple markets as their partner of choice and are well placed to help manage more complex supply chains. With a team on the ground, we make sure we provide the visibility required to our clients. For more information, please contact us at contact@et2cint.com.

Containers: the outlook for 2022 Read More »

blank

Electric Scooters & the E-Mobility Trend

Industry Insights / David Young / e-mobility, e-scooters, electric scooters

Electric Scooters are more and more common in cities across the world as part of an e-mobility trend. We took a look at this exciting growth market and some of the product specifications.

Electric Scooters – Market Overview

Now more than ever, sustainability and climate consciousness are not merely trends but a necessity. The number of battery-powered vehicles is growing exponentially worldwide; apart from the household name of Tesla, such brands as Volkswagen, BMW, Hyundai, BYD and many more are shifting towards electric power and making commitments to be all-electric within the current decade. It is safe to say that since their first introduction over a decade ago, electric vehicles (‘EV’) have rapidly grown in use and popularity as well as becoming more commercial (distance and affordability).
According to the International Energy Agency (IEA), EV sales surged ahead last year to capture a record 4.6% share of the new vehicle market; in the first quarter of 2021, sales more than doubled from the same period in 2020 in each of the three largest markets, Europe, China, and the US.

And e-mobility is not solely the reserve of the car market. Battery power is being adopted and used in many different modes of transport such as electric trucks, buses, bikes, electric scooters, segways and beyond. Statistically, e-scooters are one of the fastest-growing e-mobility segments; the global electric scooters market size was valued at US$ 18.5 billion in 2020 and is expected to reach nearly $41.98 billion by 2030, according to a study by Grand View Research. Electric-powered scooters have been on the market since 2008 and have a growing popularity among urban riders due to their low weight, agility, and convenience.

Electric Scooters and Micromobility

Micromobility is also a growing trend, particularly within cities. These are trips that are less than 8km in distance. You would have no doubt seen electric scooters in use in some cities whether through shared mobility providers or just out on the streets (or pavements!). This is though is not yet uniform and is down to location-specific factors. Certain countries have long traditions in micro-mobility (includes bicycles, mopeds, e-kickscooters) and there is certainly a greater update in such locations of micro-mobility (Italy 81% and China 86% as surveyed by Mckinsey & Co). Whichever type of vehicle used, there is no doubt that the electric scooter will become a more common sight.
Just as a comparison, the market for electric scooters is anticipated to be 160 million units by 2035 when E-bikes are estimated to be 40 million units. There are a number of factors underpinning the growth of this market.

a) Environmental Consciousness

Inevitably, there is an increase in consumer awareness regarding eco-friendly transportation. They have no emissions and reduce the carbon footprint (particularly important given the deliverables post COP26).

b) Commercial/Economical Solution

From the Consumer’s perspective, e-scooters are agile, reliable and affordable. Given the functional capability, they can be lightweight and also fold up making the electric scooter convenient to carry around especially in the rush hour traffic!

c) Government Incentives

As a result of their impact on the city environment, there are many Governments (including local) that have already implemented schemes and support programs promoting electric mobility (e-bikes, scooters and mopeds); the measures under such programs primarily include purchase and vehicle registration subsidies in countries such as the US, UK, Norway, China etc. These do often work better where there are shared mobility providers that are engaged with local governments to further enhance usage.

Sourcing Markets

Given the prevalence of E-Scooters in China, it will be no surprise that there are many brands and manufacturers already established; particularly in China’s Southern manufacturing base (leaning more towards tech with some of the specifications).
Although a large growth market, it is important to make sure that you understand the product, import duties and regulatory environment. For example, in the UK, electric scooters are not able to have license plates currently and are not allowed to be used (unless specific exceptions) on the road or pavements.

It is therefore worth considering the following:

i) Certifications

A Lithium battery safety certificate, as well as MSDS documentation, are a must when importing an e-scooter. Other certification requirements may vary based on the local regulation for the importer country. Shipping and importing any batteries is always highly regulated given the risk for fire.

ii) Import duties

Anti-dumping and anti-subsidy duties on e-bikes imported from China must be considered depending on whether the restrictions are in place for the importer country.

iii) Warranty

The industry standard is a one-year aftersales service for quality issues and 1% components provided for free. Given the nature of the product, having the ability to service it will always form part of the sales process.

iv) Quality control

Given the value and compliance requirements, make sure you undertake an upstream QC pre-shipment. Essential.

v) Specifications

Some key specs to think about for electric scooters include mileage on one charge, speed, charge time, control panel and tyres. There are lots of options and make sure that you have the model you require.

ET2C x JD.com (OPTIONAL)

As part of our partnership initiative, ET2C has entered into an agreement with JD Worldwide – JD.com’s international business – on electric scooter sourcing for primarily the UK market.

The partnership will leverage JD’s extensive supply chain resources for electric scooters and ET2C’s global sales network and in-market experience to make ‘sourcing simple’, whilst ensuring our clients have access to the most complete buying solutions.

Summary

At ET2C, we are always looking for innovative products within growth markets. There is no doubt that electric scooters will be a prevalent feature of city living within this next decade. The industry will be further supported by the rise of sharing apps and government incentives. We have all the capabilities on the ground and product knowledge in China to support our clients in this exciting area.
For more information, please contact us at contact@et2cint.com.

Electric Scooters & the E-Mobility Trend Read More »

blank

Top 8 Powerful Sourcing Trends 2022 To Read Now

Industry Insights / David Young / Global Supply Chain, Sourcing Trends

Sourcing Trends for 2022 have echoes of last year, although the length of the Pandemic has accelerated certain offshore manufacturing strategies. …

Top 8 Powerful Sourcing Trends 2022 To Read NowRead More »

Top 8 Powerful Sourcing Trends 2022 To Read Now Read More »

blank

Global Supply Chains in 2022

Industry Insights / David Young / Global Supply Chain

Global supply chains have been the subject of many articles, column inches and broadcast journalists’ notes over the past year, and with good reason. As we start 2022, is this disruption coming to an end – we look at five key trends for the year ahead.

Overview

Global supply chains have been significantly disrupted throughout 2021 primarily due to imbalances in supply and demand. The media spotlight has emphasised how supply chains nowadays are interwoven webs that span out across borders and oceans. Globalisation and efficiencies within the shipping industry (containerisation) have enabled supply chains to scale creating significant benefits for consumers.

As companies look to build resiliency and ‘flex’ into their supply chains in 2022– potentially identifying new suppliers in new markets – the level of sophistication is likely to increase, albeit there should be a greater capability to address the disruptions this past year has presented.

For any company, the situation caused by the global pandemic has revealed weak points but also opportunities. Having a good understanding of the current scenario and identifying the factors that will impact the global supply chain in 2022 will present a strategic advantage for any business aiming to build greater resiliency.

Global Supply Chains: What to Expect in 2022

1. Logistics Capability

With the factory shutdown in China back in February/March 2020, there has been a myriad of factors that have created disruption to logistics capability including repeated market global lockdowns (Hong Kong has just taken measures in its 5th wave), bottlenecks on supply routes, container shortages and consequential factors like freight rates and delivery times.

The recent sharp drop in the delivery times index reflects surging demand and/or widespread supply constraints. In such situations, as buyers need to closely manage stock levels, it is usual for suppliers to have greater negotiating power. Also, and importantly, such delays can have a significant impact on working capital availability potentially constraining cashflows.

Many reports forecast that container capacity will continue to be constrained over the coming months which will lead to a shortage of imported products. However, there is an expectation that the situation will ameliorate into Q2 after the usually Chinese New Year rush – notwithstanding a lot of companies have already ‘stocked up’ to address the lead times. Anyway, assuming that these disruptions recede and that access to sea and airfreight reverts back to pre-pandemic levels, it will likely take some time before the market normalizes.

To build resiliency, companies should look to re-design alternative supply chain flows and focus on strategic sourcing.

2. Production Lead Times

Production lead times have already been pushed out in 2021. Certainly, in China, there has been disruption caused by an electricity shortage on the back of some lofty environmental commitments. A bull market in commodity prices has left some suppliers struggling to access the necessary raw materials on time. And this is all overlaid by the disruption in logistics that will inevitably push out delivery times should raw materials need to be moved both in the market or externally.
According to Deloitte, some industries (like semiconductors/chips) will continue to face shortages next year (Supply of raw material not meeting current demand of strategic materials) although this should be less severe than the past 12 months in particular.

3. Doubling down on Technology Investment

The pandemic, by ‘pressure testing’ global supply chains, has helped highlight weaknesses. One of these is certainly the lack of visibility, as there are many stakeholders and participants within the extended network. To overcome this issue, companies will increase their investment in technology to enhance critical supply chain planning capabilities by adopting more advanced digital enablers. In particular, they will invest more into advanced technologies – such as cognitive planning and AI-driven predictive analytics – to significantly improve visibility and consequentially become more responsive to major disruptions.

4. Commodities

The global economic recovery, accommodative monetary policies, bad weather, structural shifts in the energy sector and supply chain disruptions have propelled commodity prices higher to make commodities the top-performing asset class in markets this year. In particular, in 2021, some commodity prices rose to or exceeded levels not seen since the heights of 2011. For example, natural gas and coal prices have reached record highs.

In addition, the events of this year have highlighted how changing weather patterns due to climate change are a growing risk to energy markets, affecting both demand and supply.

In 2022, commodity prices are likely to stabilize and potentially soften on the back weakening demand. The market still has the potential for more supply and demand elasticity fueled by rapid technological advances and demographic shifts.

This transparency will need to also cover the pricing and costing. Organizations will likely increase spending on analytics tools and software packages to increase the visibility across bills of materials and the respective price drivers. This will drive greater supplier consolidation and ESG segmentation, helping in reducing the variation in quality and pricing for the same type of product/service across geographies.

5. Workforce and labor

The multiple disruptions caused by the pandemic have significantly affected also the employment sector, facing uncertainties and severe labor market shortages, which have further complicated the post-COVID-19 recovery scenario for many industries. The Omicron variant continues to create challenges in markets when it comes to workforces and access to additional labour. Movement across borders is severely impacted particularly in Asia. And with the Lunar New Year approaching, there is uncertainty about labour availability should workers be able to travel home; will they be able to then return?

Summary

Global supply chains are changing and evolving at a faster pace than pre-Pandemic. This is partly driven by necessity but also the times have accelerated plans and spending that were waiting on the sidelines. Modern operations are increasingly focused on technology and innovation and this will help companies manage increasingly complex supply chains. Disruptions, although to start ameliorating, will undoubtedly continue into 2022. This time, though, it is fair to say that companies are better prepared and with the right capabilities in place, will manage appropriately.

At ET2C, we are already working with our clients across multiple markets as their partner of choice and are well placed to help manage more complex supply chains. With a team on the ground, we make sure we provide the visibility required to our clients. For more information, please contact us at contact@et2cint.com.

Global Supply Chains in 2022 Read More »

Get In Touch

Want to know how ET2C can help your business? Get in touch today and we’ll show you how.

Case Studies

Explore some of our case studies below. To view all of them, simply click the button.

Sustainable Packaging Solutions

Virtual Factory Tours

The Benefits of ET2C's Buying Office Solution

Our Thinking

Check out some of our latest blog posts below. To see all of our posts, click the button.

Global Sourcing in Turmoil: Smart Strategies for 2025 Growth

Global Sourcing 2025: Bold Strategies Amid Tariff Chaos

5 Game-Changing Reasons Melamine Will Transform 2025

Providing your business with enhanced sourcing and procurement solutions since 2001.

Explore

Recent News

6 Common Misconceptions of Buying from Asian Suppliers

ET2C Clothing Donation Drive is a Grand Success

Sustainability: The Catwalk and Beyond

Signup To Our Newsletter