Supply chain disruption

By Sabrina

Weathering the 'perfect storm' of never-before-seen supply chain disruption

While China’s stringent rules to contain COVID-19 and Russia’s invasion of Ukraine have brought new attention to supply chain pressures, managing these issues is nothing new for IPC Asia Pacific.

IPC Asia Pacific, the globally connected procurement, supply chain and services business supporting Subway franchisees, is a leader in responding to disruptions based on credible insights, data and a best practice approach.

Its CEO Duane Barber emphasised the need for businesses to focus on their risk management strategies and most importantly – be flexible.

“We have a spotlight on business continuity and risk management strategies within the supply chain. Where products are sourced and how long they take to arrive at their destination means that short and long lead times and local, regional, and global options need to be part of business planning,” Mr Barber said.

“In addition, the ability to pivot is critical as we continue to operate in changing environmental, political, and social landscapes."

Mr Barber said Russia and Ukraine provided more than a quarter of all global wheat exports.

“Sanctions, disruptions and port closures in the Black Sea have already seen market prices for wheat spike by 20-25 per cent*,” Mr Barber said.

*Beroe; March 2022, Advisory on Impact of Russia-Ukraine Conflict on Agro Commodities

“Other grains and oils had seen similar price spikes.

“In addition, freight rates and container prices were already at record highs, even before the invasion.”

Mr Barber said that for IPC Asia Pacific, the focus had, and would continue to be, securing shorter supply chain routes from existing and alternate suppliers, and having alternate plans to mitigate potential write-offs and losses.

“IPC Asia Pacific has approached this from many angles including reducing minimum order quantities out of distribution. 

“IPC Asia Pacific uses its size, scale and strong business relationships to minimise the impacts of the relentless supply chain disruptions worldwide.

“We’re weathering the storm, reducing the disruption to restaurant supply in our region. We continuously review our choice of partners across the region to ensure they can withstand the financial pressures caused by this perfect storm of disruption with more stringent risk management processes.

“As procurement and supply chain specialists, we expect and plan for disruption.

“It's all part of our standard business continuity framework,” Mr Barber said.

“COVID-19 was a little different, of course. It created challenges for the stock on hand position and forecasting as volumes varied wildly and shipping became less predictable.”

The world is feeling the impacts of a global, systemic failure in the supply chain due to staff shortages and disruption to production.

COVID lockdowns in China are affecting key ports like Shanghai port, the world’s largest container terminal. The June 2021 lockdown affecting Shenzhen’s Yantian port saw a bigger disruption to supply chains than the Suez Canal blockage of the same year. 

War in Ukraine and economic sanctions in Russia are increasing the cost of petrol and vital commodities used to produce products. Inflation is rising sharply due to increased government spending to offset the blows of COVID-19. With so many global events occurring at once, it has created a perfect storm to disrupt the global supply chain.

Every day, IPCA teams work with multiple suppliers and distributors to secure the supply chain for customers. It’s all in a day’s work, closely monitoring the production and shipment of products and commodity and currency changes.

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