Promar International

John Giles

Supply Chain Advisor

John is a Divisional Director with Promar International, the agri food consulting arm of Genus plc and has worked on market and supply chain assessments in the UK and over 60 countries around the world in Europe, North America, Latin America, the Middle East, Africa and Asia. He is also a Visting Fellow at the School of Agriculture Policy and Development at the University of Reading. He is a member of the IAGRM Council.

Are Supply Chain Shocks Really Shocks Any More?

There has been much talk over the last few years about the impact of supply chain shocks across the UK and international agri food and farming sectors, such as:

• COVID -a global incident,and one,which apart from the terrible human cost led to severe declines in economic growth and international trade and consumer well-being.

• BREXIT – a self inflicted situation, of coursefor the UK, but which has had adverse knock on impacts or many other countries that trade with the UK, especially in the EU. The situation in the Ukraine and now the Middle East. This has led to soaring costs of inputs and energy, in particular, and a huge amount of international uncertainty

• Climate change–an ongoing issue, with adverse and unpredictable weather patterns around the worldand happening more often: inAfrica, Latin America, parts of Europe, Asia and North America -all leading to disruptions to agri food production and trade

• Food inflation –this was experienced in many countries and has seen consumer behaviour change, demand suppressed - in some cases, maybe for good

There has been much already written about these “shocks”, of course and in their own way, they have all caused severe disruptions to the UK and international agri food and farming supply chains.

• Going back in time, we also had to endure the Global Financial Crisis and of course,in the UK, severe out breaks of FMD and BSE too. There have also been issues with transport logistics, especially in the Suez Canal over time, consumer and political opposition to the adoption of new agri food technology, especially in Europe, but maybe less so in other parts of the world. There are also widergeopolitical tensions, not least between the US and China which has seen issues around internationaltrade and knock on impacts across SE Asia, in particular.

“We live and work in a volatile, uncertain, complex and ambiguous (VUCA) society.  Supply chain shocks are all part and parcel of this.”

What seems to be clear is a combination of:

• These supply chain shocks have always been happening.

• They seem to be happening more often.

• The causes and impacts are increasingly complex and global in their nature: global supply chains are often turning micro shocks into macro-level effects.

• The after effects can take a long time to recover from.

So, should we be shocked by “supply chain shocks” anymore?Probably not.

 We live and work in a volatile, uncertain, complex and ambiguous (VUCA) society.  Supply chain shocks are all part and parcel of this, it seems. Many of the things that constitute a “supply chain shock” are often well beyond the control of individual agri food companies, but this does not mean to say there is nothing that can be done to mitigate against them. There are several things that can be done, albeit some are easier than others to do (and just because they are “difficult to do”, does not mean they should be avoided either). These might include:

• Be as well informed as possible about what is happening around the world - especially in the regions that you deal with either as a supplier or as a customer: this means understanding politics, economics and societal changes taking place, as well as the specifics of the agri food sector.

• Keep abreast of market conditions – investing in market and industry dashboards on a regular and consistent basis can help here. Their use means a formal understanding of key developments can be developed in economics, input and output prices, progress in key trade negotiations etc.

None of the current market volatility we are seeing and its underlying causes are likely to go away in the near or even mid-term future.

One thing is certain: agri food and farming businesses must plan ahead for what will be an uncertain future. Factoring this in to their mid to long term planning is going to be very important. It is also clear that we will need more resilient, transparent and collaborativeagri food and farming supply chains in the future.

It is sometimes hard to know where to start in developing the thinking needed to deal with these issues. What we do know though is that there are more supply chain shocks on the way. History tells us that. We have often found in working with clients these issues, rather than try and predict the specific event itself, a useful starting point can be to ask the question of all parts of the business: production, processing, R&D, innovation, HR and legal, marketing, procurement, finance and so on – “what’s the worst thing ghat can happen and if it did, what would we do?”

This can normally be done in a workshop type session and can often bea highlyinvigorating process. And it leaves an organisation and its keystakeholders in a much better position to deal with the “vuca” environment in a much more certain position in which to operatefrom going forward.

But more supply chain shocks are probably on the way: this should not be a shock in itself, surely?