Cheeseburgers, Crises and Supply Chain: What Do They Have in Common?

The cost of living crisis is crippling UK households.?

Millions of Brits face the decision of eating or heating their homes this year.

Reliance on food banks has increased by 14% and 1.3 million more people are facing poverty . The Office for Budget Responsibility predicts that real household disposable income will fall by 2.2% in 2022-23. In April, inflation hit a 40-year high . It triggered what’s been described as "the biggest fall in living standards in any single financial year since ONS records began in 1956-57." The impact? 91% of adults in Great Britain reported an increase in their cost of living between June and July 2022.

The last few years implied that this was coming. But perhaps many didn't expect to be hit so severely. April 2022 marked a tipping point, with overnight price hikes hitting households hard.?

• Ofgem increased the energy price cap by 54% equating to a ￡700 annual rise in bills for the average household.
• A 'health and social levy' was introduced meaning a 10% increase in national insurance (said to affect the lowest earners harshest).
• Council tax rose by 3.5% (up to a staggering ￡2000 annual household increase for those in council band D).

The current inflation rate is approximately around 9.1% and the rising cost of everyday goods hasn't gone unnoticed. Lurpak butter was trending for weeks after the average price of a 500g tub rose by 33% . Meat prices have risen across the board (lamb +14.3%, beef +10.2% and poultry +10.1% ). And just last week McDonald's hit the headlines after increasing the price of cheeseburgers (for the first time in 14 years ) from 99p to ￡1.19.

And it's not just inflation we're seeing. It's also the fact that consumers are having to pay more for less, a trend known as 'shrinkflation.' Shopping basket favourites like Twix, Flora and I Can’t Believe It’s Not Butter have all fallen victim to shrinkflation over the last few weeks .

It's depressing.

Economic forecasters claim that this is just the start of what is inevitably a crisis of a cataclysmic scale. The reasons for what we're seeing (the invasion of Ukraine, geopolitical uncertainty, transportation disruptions, material scarcity, COVID-19, etc.) all come back to one thing...

SUPPLY CHAIN.

After working in this industry for almost 25+ years, I've seen firsthand that supply chain leaders are by default, planners. A big part of what we do is plan, run scenarios and model outcomes to better understand points of stress, heightened demand or predict challenges we might encounter.

But that's not so easy now.?

• ?How can we plan when the cost of raw goods is skyrocketing so chaotically?
• How can we carry on in a 'business-as-usual' manner when the environment in which we're working is anything but usual?
• What are the next steps and how do we respond?

Here are 3 things I think supply chain leaders should focus on…

Building resilience

The blows to the economy, supply chains, businesses, retailers and consumers aren’t going to stop anytime soon. So this isn’t about finding short-term fixes. It’s about building long-term resilience so that supply chains are better equipped to respond effectively to disruption. The best way to build agility in your supply chain is through digital transformation.?

If you’re not fully digital, you’re not going to survive.?

I genuinely believe that.?

Companies that digitally transform can better move their resources, people, assets and inventory, at any given time. With demand forecasting technology and access to big data, we can anticipate issues and take immediate precautionary measures to mitigate risk. This also allows us to geolocate potential points of stress in the system and identify peaks in demand for goods, to better source materials. It might prompt organisations to move production onshore or nearshore. Not a bad idea if you want to secure materials and reduce reliance on sourcing from fragile or high-risk regions.

Whichever way you look at it, digital supply chains (through their access to data, ability to spot trends and dissect analytics) enable better-decision making, proactive responses to potential crises and fewer disruptions.

Investing in your people

Building resilience in your supply chains isn’t just about technology. In fact, digital transformation is a pointless activity if you’re not investing in the people who need to make sense of the data accrued and provide human insight to make more informed, rational and contextual decisions.

Right now, we’re dealing with a skills gap. We’ve been going to the same place and speaking to the same people for ideas. But how can the industry transform without inviting fresh thoughts, new perspectives and different insights into it?

Short answer: it can’t.

Agility and adaptability don’t just come from the graphs on a computer screen. They also come from the people sitting around the table. It’s not enough to have a supply chain team full of people who’ve had a specialist education in supply chain. Because supply chains are changing at record speed. And more importantly, they’re integrated into every part of our society.

In today’s world, supply chain leaders also need to be economists, geopoliticians and business people. They need to be well-rounded enough to spot how a single decision could reverberate and impact other components of the system. It’s about keeping one foot in the trenches (and doing what is needed) and one foot out (to maintain the ability to pivot and adapt).

Historically this industry has been run by supply chain and career-long specialists. But I think this is the time to open the doors wider. We need more generalists in this space.

Collaboration and problem-solving

Building resilience through digital transformation and improving (and broadening) your talent attraction strategy sounds great on paper. But how do you do that at a time when pressure is so immense and supply chain leaders feel like they’re being assaulted from all angles?

I think the answer lies in collaboration.

I’m lucky enough to get to sit on a video call for 30-60 minutes each week (for Transform Talks Podcast ) with a world-leading supply chain expert. The amount of learning that happens during those calls is immense. We challenge each other’s ideas, we share case studies and insights and we create new possibilities. Those conversations transform the way we operate and have an impact on the type of content we produce at Future Insights Network .

Now imagine what takeaways, tips and insights you could take away from a network of thousands and thousands of other professionals, operating in the same space, tackling the same challenges and solving the same problems that you face.

That’s what Future Insights Network was set up for.?

I genuinely believe that our 130,000+ network of supply chain leaders, business execs and academics is like no other! We have world-leading case studies, advice and actionable insights at our fingertips. (If you haven’t already, check out Supply Chain TV+ , a brand new value-packed offering for supply chain professionals, where you can access everything supply-chain related in one place).

Let’s use our knowledge and our insights to transform together!

A 20p increase in the price of a McDonald’s cheeseburger might not mean much to some people. But it’s symbolic of one of the biggest supply chain crises we’ve seen in living history - one that doesn’t seem to be going anywhere.

Now is not the time to bury your head in the sand.

Now is the time to listen, learn and act!