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Weekly Roundup - SMBs Resilience Strategies and Struggles with Supply Chain Law

Yulia Fedorova

03 May 2024

Software Advice's study (a subsidiary of Gartner) reveals SMBs are contending with geopolitical, economic, and cyber-related challenges. A significant 31% plan to invest in new SCM software by 2024 to bolster supply chain resilience, particularly in the US. Strategic tech investments in AI and machine learning are recommended by Gartner's Olivia Montgomery for economic and inventory challenges. Cybersecurity is vital, with 41% of SCM leaders affected by cyber incidents, leading to a focus on advanced cybersecurity investment. Additionally, over half of the leaders are negotiating or considering negotiations for supplier contracts and joining purchasing groups for cost efficiency. Attracting talent remains difficult, with 80% of SCM leaders facing retention issues, prompting suggestions for improving employer branding and flexibility. The research underscores the critical role of technology, cybersecurity, cost management, and workforce strategies in strengthening SMB supply chains.

BAUCH, a German company making machines with materials from various regions, faces challenges with the new German Supply Chain Act mandating rigorous supplier checks for human rights and environmental adherence. CEO Manfred Bauch deems the law almost unworkable, threatening the supply chain, while SMEs struggle with its financial and administrative demands, fearing global competitiveness impacts. The EU's Corporate Sustainability Due Diligence Directive extends these requirements, promoting responsible business and sustainability in response to investor and consumer expectations. Amnesty International supports the directive for global accountability, but German businesses find compliance tough due to informational challenges and differing international labor laws. Germany opposed the EU's directive over concerns of added bureaucracy, and sectors like logistics criticize the Supply Chain Act for impracticality and cost increases. The German Labour Ministry notes that companies aren't expected to guarantee violation-free supply chains, only to conduct due diligence. SMEs face a 'cascade effect,' burdened with compliance tasks from larger companies, while business groups claim actual compliance costs surpass government estimates. Critics within German business circles argue that the law's bureaucratic nature could undermine its intended aim to protect workers' rights internationally.

After a tough period with reduced demand, the air freight market is recovering, as seen in a surge in air cargo traffic since August 2023 and a strong demand growth in early 2024, driven by e-commerce. Despite this positive trend, China's economic deceleration poses a potential risk. Maersk's Preben Hansen notes a mixed industry response, with Maersk Air Cargo focusing on integrated transport and selective demand growth. Customers now favor cost effectiveness and supply chain reliability, expecting more consistent services and swift issue resolution. The industry is moving towards regional sourcing and nearshoring to bolster supply chain resilience and expedite deliveries. Looking ahead, there's a focus on creating robust supply chains, including the diversification of manufacturing sites, although China remains a key production center.

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Dive deep into research

"Mathematical programming-based methodology for the evaluation of supply chain collaborative planning scenarios" by D. Pérez-Perales, A. Boza, F. Alarcón & P. Gómez-Gasquet (2024)

"A vendor-managed inventory model for a three-layer supply chain considering exponential demand, imperfect system, and remanufacturing" by Katherinne Salas-Navarro, Whady F. Florez & Leopoldo Eduardo Cárdenas-Barrón (2024)

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