Trade Outlook 2021

It’s no secret that the COVID-19 pandemic has severely impacted the global economy and supply chains. Some logistics sub sectors have been able to recover in just a short 12 month window while others futures remain unclear. Dealing with uncertainty in just about every aspect of life has become a skill in 2020. In 2021, on the other hand, attention is turning towards a recovery proposition.


The global economy is in fact expected to recover at a glacial pace. Output is expected to expand by 4% in 2021 while still remaining below pre-pandemic projections by five percent. The idea is that the global economy will regain its strength as vaccinations proceed and the pandemic is controlled. As a result, consumption and trade will therefore improve as a vote of confidence.


The supply chain will play an integral role as the global economy seeks a semblance of normalcy and a healthy balance. The future is always uncertain, but now perhaps more than ever. So, we put together a trade analysis for what is expected to shape the supply chain in 2021.


Challenges

2020 had its fair share of challenges. The common goal across many companies in various industries is to simply keep operations on track despite the persistent market volatility and disruptions caused by the pandemic. The supply chains shocks have taken many different forms and shapes during 2020. Some of the largest disruptions could be felt in an over reliance on single sourcing in high impact areas and other disruptions were more complex such as mitigating risk and meeting surges in demand.


Although supply chain resilience and supply chain agility have become increasingly important and reported on in 2020, it would be incorrect to solely credit COVID-19 for some of the year’s top challenges. Many of these challenges have existed for over a decade. The pandemic simply shed a light on them, making them more acute.


The ability to weather demand change and market fluctuations has always been the true test for supply chain success. The key to success and what separates successful supply chains apart from others is the ability to respond as opposed to react. The risk facing any particular industry value chain is a reflection of its level of exposure to different types of disruptive shocks. This includes exposure to the vulnerabilities of a company and/or it’s supply chain at large.


It’s safe to say that no supply chain was immune to the shocks of the pandemic, but some were more vulnerable and impacted than others. A company’s supply chain approach can be a source of one of two things: resilience or vulnerability. The outcome is completely dependent on the risk management operations as well as the implementation of business continuity plans.


Despite all of the challenges 2020 presented. There are some opportunities for supply chains as well as a range of options in pursuit of resiliency in the years to come.


Opportunities & Trend Forecast

We are sure you are tired of hearing the term supply chain resiliency among other hot button phrases that were all the rage in 2020 in an effort to boost morale. Although they may be tired, their application remains promising. Here are some of the top trends for supply chains in the years to come.


Digitization

Global manufacturing has only just begun implementing new technologies as a step in the right direction towards a more digital operational model. While most companies are still in their early stages of adoptions, some of the new technologies include analytics, IoT, AI, and other digital platforms that enable companies to move towards establishing end-to-end visibility in the supply chain. This is an opportunity for organizations to have a clear picture of supply chain operations and to strengthen supply chain risk management as a direct result.


In a McKinsey survey of supply chain executives conducted in May 2020, an overwhelming 93 percent reported that they plan to take steps to make their supply chains more resilient, including building in redundancy across suppliers, nearshoring, reducing the number of unique parts, and regionalizing their supply chains.

The goal is to connect the entire supply chain to a seamless flow of data. Digital strategies deliver major benefits to the decision making process by improving supply chain performance and creating value in every component of the supply chain.


Sustainability

Increasingly, more and more businesses are implementing green initiatives into their business models to reap the many benefits for sustainable supply chain operations. The ROI potential includes cost savings, customer alignment, reputation benefits, industry stewardship, and more.


“More and more of our customers are requesting fine grain detail on how their products are made, who they are made by and the impact at each point in the supply chain,” says Nick Benson, CEO of supply chain technology company Atelier.


ROI and customer loyalty are some of the many benefits of sustainable supply chain practices, not too mention the positive environmental impact, too.


Alternative Funding

Normal bank lending to SMEs dropped ten percent in 2020 amidst the roll out of government financial aid and emergency coronavirus funding. As the loan schemes wrap up, it’s most likely that SMEs will have to look at alternative sources for funding as banks are predicted to become increasingly risk averse and lose their appetites for SME growth funding.


Alternative funding platforms like TradeRiver offer more funding application flexibility. SMEs are not limited in what they can use a revolving trade credit facility for. We have streamlined the process to make it easier for SMEs so they can focus on their business and access reliable funding when they need it at their disposal.


Ultimately, the supply chain projections moving forward are focused on digitization and flexibility so that companies and their supply chains can employ new resources to ramp up or down to meet the unprecedented rapidity of market changes. Coming on the heels of Brexit and a flare up in global trade tensions, COVID-19 has forced companies to pivot. Business and operation models must aim to build more resilience.


Not everything that could go wrong will go wrong, but business can't afford to get caught flat footed when disruption strikes. Although preparing and remodeling business models comes at cost, those investments carry the promise to minimize risk and boost productivity. At TradeRiver, we have substantial amounts of lending capital to deploy and look forward to supporting many more mid-sized businesses with their specific needs over the next 12 months to help support the rebalancing act of 2021 and beyond.



16 views0 comments

Recent Posts

See All