How have we dealt with the turmoil in the economy in recent years?
Today’s shape of economic connections in the world offers great opportunities which only a few thought about 30 years ago. The system is operating on the principle of connected vessels more than ever before.
Globalization translates into easier establishment of business relationships, but it also means globalization of risks that used to have a local impact. Sometimes one event can completely change the conditions we knew and lived in.
Covid-19 – 3 years with the pandemic
When COVID-19 began to spread in China, it affected supply chains in many industries. It has long been known that production in this country supplies a large number of components used all over the world.
Due to the pandemic, the availability of raw materials has decreased, which resulted in an increase in their prices. The situation had an impact on manufacturers who had to change production plans due to limited access to raw materials. This resulted in the need to postpone delivery dates, which affected the ability to meet market demand.
As a result of the pandemic, a large part of producers withdrew from their economic activities, either completely or from specific product groups. Many businesses had to close, which resulted in a decrease in production and a shortage of various goods. The drop in production also affected the flow of products because limited quantity did not meet market demand.
How do we act at EURO METRICS to mitigate the effects of these shortages for our clients?
Fortunately, we were able to smoothly relocate projects from suppliers which were most affected by pandemic effects, to those companies that had the ability to start production and deliver goods. This was possible thanks to a developed network of MES suppliers in China. Responding to customer demands, we also focus on the development of suppliers in Europe.
At the moment, further restrictions caused by COVID-19 are being reduced in China. However, the world economy is facing an energy crisis due to Russian aggression in Ukraine.
The war in Ukraine and its impact on the supply chain
The energy crisis is not the only consequence. In addition to the typically human aspects, such as the tragedy of millions of Ukrainian citizens, the economy was also affected in a different way. As an example, let’s analyze steel prices. As a consequence of the war in Ukraine, producers reduced steel supplies, which had a negative impact on the market. Production has fallen, prices have risen, which has a noticeable impact on many industries, such as construction, the automotive industry and the production of machinery.
Today, steel prices are approaching pre-war levels, but availability is still not satisfactory. It should be remembered that a large part of the supplies came from Russia.
We regularly analyze production forecasts with our customers and according to it we are able to create material stock at our suppliers. We try to recalculate the demand on an ongoing basis, so that in a crisis situation, we provide our customers with time to reschedule deliveries and agree on dates with the final recipient.
We have no influence on the future. However, we have tools, a global network of suppliers and solutions at the logistics and system level that enables us to respond effectively to emerging events.