The VUCA world is less of a crisis and more of an opportunity
Global supply chains came under severe strain during the Covid-19 pandemic. The dust was beginning to settle when the war in Ukraine compounded the existing supply chain pressures. Recent data from the European Central Bank (ECB) suggest that European supply bottlenecks remain historically high. Accordingly, the ECB has revised its annual inflation rate for 2022 within two months by 1.3%, indicating that the impact is said to continue well into 2023. The acronym VUCA – volatility, uncertainty, complexity and ambiguity – is now part of everyday speech.
EU crisis
Europe is particularly volatile due to connectivity issues and sanctions on commodities originating from or headed to Russia. Add to that the recent labour unrest in the UK and German seaports, complicating trade flows worldwide.
Many companies underestimated the complexity of the scale and the pace of rebound from the global supply chain bottlenecks, struggling to create a strategy to navigate the crisis with sufficient medium and long-term orders. The ambiguity resulted in a spike in consumer prices, order backlogs and clogged ports to create the perfect storm. And this uncertainty, over time, contributed to slowed growth and inflation.
According to figures published by Eurostat, the statistical office of the European Union, the eurozone’s annual inflation rate was 10.6% in October 2022, up from 9.9% in September. A year earlier, the rate was 4.1%. European Union’s annual inflation was 11.5% in October 2022, up from 10.9% in September. The European Central Bank forecasts a projected decline for 2023 at 5.5% and 2.3% in 2024.
Looking ahead
With neither economic theory nor empirical evidence to define a clear-cut strategy in dealing with the effects of long-term supply chain shortages, global think tanks are mulling over innovative ideas to provide more than just a back-of-the-envelope calculation to save the economy.
According to a recent strategic report by the European Parliamentary Research Service (in-house research department and think tank of the European Union), there is hope. But the approach hinges on going digital, green and joining hands with other like-minded countries to survive the VUCA world. In addition, the report encourages manufacturing companies to create strategic policies that positively influence supply chain management by reshoring, nearshoring or diversifying functionalities in these uncertain times.
The approach by the EU think-tank reflects the ethos of Unite.
Accomplishing market equilibrium in a volatile scenario is daunting. This lacuna drives Unite to bolster existing innovations to achieve dynamic pricing in our product assortment.
Dynamic pricing is a competent strategy to boost sales since market conditions are constantly changing and not just during volatile times. When it comes to decision-making, there may be times when reduced pricing might stimulate demand and boost sales. Contrarily, there may be times of high demand when it is preferable to boost prices, take advantage of sales possibilities, and increase earnings. As a result, you adapt more quickly to emerging market conditions and customer expectations.
We strive to innovate constantly, but it doesn’t end there because at Unite we understand that the right way to tackle volatility is to procure responsibly and collaboratively.
Responsible procurement
Unite’s approach is clear: it is to connect the economy for sustainable business. By connecting buyers and suppliers digitally, we support them through our network to develop business relations that create value over time.
The ‘uncertainty element’ means there is no foolproof method to tackle the VUCA world, but while we are finding a way forward, it is good to keep sustainability in our minds. Therefore identifying sustainable buyer preferences benefits suppliers and the environment. It can only work when there is a two-way commitment between buyers and sellers. If buyers attribute economic value to sustainable buying preferences, suppliers will be financially motivated to incorporate sustainability criteria into their business model.
Simply put, by giving sustainability criteria a value, sellers can invest in upgrading their services, allowing them to maximise profits on every transaction by determining what customers are willing to pay for. In addition, this can be crucial information when introducing new products and offers.
The development of a green economy – low carbon, resource efficient and socially inclusive – and digital innovations at Unite go hand-in-hand. Innovative and automated integrations in the Unite Platform can drive changes in the entire economic value chain to satisfy customers’ changing demands and help sellers compete and rejuvenate their common markets. All this while keeping honest relationships and transactions as the cornerstone.
It's the right way forward!