Into a month of 2023, and we are witnessing a world of change, some challenges, but more opportunities than threat in global supply chains. The current environment of uncertainty including geopolitical conflict and tensions in Ukraine and Taiwan along with financial stressors, including liquidity concerns, currency exchange volatility and rising interest rates, has resulted in some turbulent times, requiring businesses to take bold steps to financially fortify their supply chains.
Trends that would give direction to global supply chain business drivers would be-
Recession in Europe looms leading to global implications.
While the U.S. is expected to narrowly avoid a recession, Europe inches closer to a recession that will likely pick up through the first quarter of 2023. Peak inflation along with high fuel and heating costs is shrinking consumer confidence and purchasing power. Businesses are facing a potential liquidity crisis amid new tax policies, corrective actions by central banks, and bond market pressures.
The global chip shortage will not ease up until late 2023
Disruption continues to drag down production volumes in the markets of China and Taiwan, as the region endures changing Covid policies, raw material and labor shortages, and more expansive government controls. While many countries and chip manufacturers have expanded production capabilities to new regions, mass production in these markets won’t happen until 2024 and it is anticipated that the shortage will likely continue for another year or more as companies rush to prioritize and meet backlogged demand.
Ukraine and Russia crisis will have global implications, but also reveal massive opportunities.
The war in Ukraine will continue to have far-reaching implications for countries that rely on Ukraine and Russia for oil, gas and grain. However, once things stabilize in Ukraine and Eastern Europe, there is tremendous opportunity for growth that will have similar downstream. Stabilization in these regions (and forward-thinking investment strategies) will reveal opportunity for strong growth as demand for output remains high.
Business decision-making will pivot from efficiency and just-in-time to resiliency and just-in-case.
Businesses will have to prioritize operations and seek ways to re-engineer technology, systems and processes that ensures inventory is available to be moved to where it’s most needed. It’s important to point out that most supply chains are currently not nimble enough to be truly resilient and adaptive because they are primarily wired for just-in-time outputs. There is no room for excess inventory within a framework of fervent efficiency, but this strategy is ineffective during periods of sustained volatility.
With the anticipated turbulence and disruption, businesses will seek ways to shore up liquidity and reduce financial risk as record inflation in addition to higher operating and growth costs persist. Traditional options like commercial lending will be less attractive – or unfeasible altogether – due to rising interest rates. Alternate lending options come as a rescue in these times.
Alpha Bridge works closely with businesses to help them build strong and resilient systems backed by creating the right kind of financial opportunities. Our diverse array of lenders specializing in structured lending are chosen best suited to ones’ business requirements and growth plans. Apart from working capital and cash flow solutions, these lending options provides businesses with the financial confidence to realign their operations and decision-making to a more turbulent business climate – while also uncovering new growth opportunities on the other side.
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