In conversation with Prisila, Correspondent, Asia Business Outlook Magazine. Tarun discusses anticipating risks in turbulent markets and sustaining communication with suppliers and stakeholders during crises.
Tharun Loganathan With over 23 years of multifaceted experience in supply chain procurement, he has held strategic roles spanning AIPAC regions. Proficient in logistics and supply chain management, he effectively manages diverse teams encompassing Indian, Southeast Asian, Chinese, and Australian professionals.
Exploring the Unprecedented Market Turbulence in Supply Chain and Procurement
The current global economic landscape is marked by significant volatility, influenced by several key factors. Firstly, China is experiencing a decrease in domestic consumption, creating uncertainty in global markets. Secondly, the ongoing tensions between Russia and Ukraine in Europe are contributing to concerns regarding the export of goods from China to Europe. Lastly, the United States is undergoing financial fluctuations, leading to an unstable demand for goods. This intricate web of circumstances has resulted in a precarious balance between supply and demand. There are instances of material shortages when there is demand, and conversely, surplus materials when demand is weak. This phenomenon is most evident in industries such as the chemical sector, where prices have been exceptionally erratic over the past couple of years. These fluctuations are primarily attributed to the erratic start-stop dynamics and logistical challenges in the industry, rather than any promotional factors.
Anticipation in the realm of procurement and sourcing is a vital skill that can greatly benefit organizations in navigating the complex landscape of raw materials. While it's crucial to have a strong grasp of the raw materials themselves, an often-overlooked aspect of anticipation involves understanding the ultimate applications and usage of these materials. Let's take acrylic acid, for instance, a chemical compound with a myriad of applications. Beyond its chemical properties, it serves as a super absorbent, finding its way into products such as diapers and various hygiene-related items.
Comprehending the downstream demand for raw materials is a key component of informed procurement. By looking beyond the initial acquisition and delving into the broader supply chain, buyers and procurement specialists can better prepare for price volatility and market fluctuations. This holistic perspective empowers organizations to make more informed decisions, mitigate risks, and capitalize on opportunities.
Approaches to successful communication and collaboration with stakeholders during times of crisis or market disruption.
To foster stronger transparency with our clients, I recommend instituting a weekly conference call with key customers. This will allow us to gain valuable insights into any changes happening at their production facilities. Concurrently, it's crucial to establish a digital platform for sharing these discussions with our internal teams, especially the planning department.
By doing so, our procurement team can promptly communicate any adjustments related to the rescheduling of shipments to our suppliers. The primary objective is to shift from the existing scenario characterized by volatile fluctuations to a smoother, more predictable pattern in our operations. This will facilitate a more seamless and collaborative relationship that spans from our customers to our suppliers.
This strategy holds significant importance in today's unpredictable supply chain landscape, where adaptability and open communication are key to success.
Comprehending the downstream demand for raw materials is a key component of informed procurement.
Strategies for Bolstering Supply Chain Flexibility and Responsiveness in High-Volatility Markets
In today's complex global supply chain landscape, it's vital to acknowledge the evolving dynamics in shipping. Currently, many shipments are primarily routed through Southeast Asia, often with a heavy focus on China. However, the development happening in China can sometimes escape our immediate attention.
To navigate these challenges effectively, I suggest adopting a broader perspective. It's essential to keep an eye on the departure of shipping line vessels from their source port to their intended destination. With a watchful approach, any potential delays or transshipments can be anticipated. These occurrences have become more frequent due to fluctuations in shipping line demand.
Maintaining transparency in tracking the arrival of shipping lines is crucial for your supply chain team. By staying informed about these changes, you can adapt to the shifting landscape and ensure the reliability and efficiency of your supply chain operations. This awareness will enable you to make informed decisions without any promotional agenda, helping you navigate the dynamic world of global logistics.
"Anticipation in the realm of procurement and sourcing is a vital skill that can greatly benefit organizations in navigating the complex landscape of raw materials."
Navigating Market Volatility with Cohesive Team Engagement.
In today's dynamic market landscape, the interconnectedness of our sales, supply chain, and R&D teams is more crucial than ever. Innovation has emerged as the linchpin of our survival and growth. With challenges affecting the sale of existing products and dwindling production volumes, R&D plays a pivotal role in this equation.
These teams should be seamlessly integrated to seek out groundbreaking raw materials and intermediates. In this ever-competitive environment, everyone is vying for the same share of the market. By exploring novel products or alternative suppliers to meet customer demands, we can secure a more substantial piece of the pie.
Such an approach not only enhances our revenue but, more significantly, bolsters our company's profitability. By collaborating and strategizing together, we can adapt to the evolving market dynamics and secure a more prosperous future for our organization.
Conclusion: In the chemical industry, the next six to seven months will be highly volatile. It's wise to proceed cautiously with your purchases and avoid committing to long-term sourcing strategies. Keep a close watch on China's market prices, as they greatly influence the Asia-Pacific region. Additionally, monitor crude oil prices, which are currently above $90 per barrel and may approach $100. Stay informed about shipping challenges, especially regarding arrivals and transshipments. Lastly, prioritize open and honest communication with customers to foster collaboration and address mutual challenges effectively.