Re-Homing Purchasing

Taking a global view of the world even for SME's is a must do exercise and is increasing in its importance. The pressure excerpted on supply chains following the unjustifiable invasion of Ukraine is a stark reminder of the importance of localised supply capacity. Many wars have been won and lost not through a differential in fire power but more often through the logistical capacity and distances required for the supportive supply chains. The political vibrations that are rippling around the world currently should, no must, make every manufacturer and distributor of all products sit up and start to focus on the fragility of their businesses in the event of some quite possible future (short-term) events.

Hungary has recently backed Russia by vetoing aid, an action that is tantamount to revolution within the European Union Club. This presents the other members states (they used to be called countries of course) with a significant dilemma. Do they evict Hungary for non-compliance, do they impose sanctions or do they simply sit and talk about it whilst Kiev burns and the bulk of the rest of the world remains highly supportive. Either way the EU is weakened but with them being landlocked and surrounded by EU members it should not be too hard to choke the life from them in a very short time. The issue again will be what products, materials etc do Hungary export and how will sanctions affect your business.

Further a field we have China creeping up on Taiwan and making all of the noises that we should conclude will end in an invasion in the not too far distant future. The measure for this is of course how the world approaches the Russia/Ukraine position. Cracks in the EU will bolster Chinas ambition with the US again being the giant they really would not wish to upset, too much. Taiwan is the major electronics manufacturer in the world (very much as Ukraine is to Grain production) so would be massive asset to China to further strengthen its manufacturing hold on the world. I would expect to see a few smaller explorations of strength from China including agitating relations with Japan who would be another potential expansionist target for them. Almost everyone looks to China for products due to the price point available and the increasing quality that can be delivered but is this smart business or short term economic necessity. What it really is high risk for your business. Once China steps out the world will only have the recourse of sanctions or war, so sanctions it will be which will castrate many companies supply lines within a very short time.

The sleeping giant in all of this global dissidence is India. If you look at the massive oil and gas wealth generated through the middle east what most do not see is that in most cases the whole infrastructure would fall over very quickly if it were not for the capabilities of the Indian who actually run those businesses within those countries. Look further afield and you will find a wave of highly qualified and talented Indians in most positions of importance be it in medicine, engineering, manufacturing, technology and increasingly politics. Indians biggest export is its people, its and export that at anytime if it were to return home would cause a seismic explosion in growth for India whilst at the same time an equivalent explosion downwards for the rest of the world.

So where does your business it in all of this?

Think hard on these 3 things and ask yourself how well your business is positioned or structured for just one even let alone all 3, which is quite possible before the end of the 2020's. Re-Homing, shortening and tightening your supply chains has to be a pre requisite of good management and an essential aspect of corporate governance and shareholder value delivery.

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