Half-empty shelves, longer delivery times, labor shortages, and increasing prices of consumer goods are symptoms of a global problem – supply chain issues. Bottlenecks at many steps along the way have been exacerbated by the pandemic, causing severe issues in a system that demands timeliness to function properly. Worse still, this has happened just as demand for many products increased drastically. The ongoing supply chain crisis threatens to have significant consequences for the upcoming holiday season throughout the world as many consumers can’t buy what they want when they want it, and experts predict that it might get worse before it gets better.
The supply-chain disruption started over a year ago, as COVID-19 response from governments and corporations created many interruptions along the supply chain. This, combined with rapidly changing customer demand, has caused severe disruption, resulting in manufacturers unable to meet consumer demand in time. The disruption cuts across various sectors, including manufacturing, consumer goods, and even electronics, with Apple reportedly halting the production of their latest iPhone entirely for the first time in over a decade.
While the pandemic has significantly affected the global supply chain, external hindrances to the value chain, such as political disputes, are not a new thing and will continue to exist for as long as there is global trade. So, what is responsible for the current supply chain crisis?
Why supply chain issues are showing up now
The problem with the flow of goods, especially in the consumer goods industry, is quite profound, as there are underlying structural concerns that cause delayed delivery and increased prices irrespective of the pandemic, energy crises, or grounded container ships. All over the world, the core problem remains the same – the process of getting products from factory to shelf is broken. There are issues at every point in the distribution chain – from too many intermediaries adding unneeded complexities to the overly complicated relationships between brands, distributors, and merchants, to the overwhelming reliance on expensive cash rather than digital payments – the traditional supply chain is broken and no longer fit for purpose.
In addition, there is little or no sales data across the industry, as FMCG brands have no idea who their customers are. Without visibility into the distribution, it becomes impossible to anticipate rapid increases in consumer demand and make data-driven decisions to meet that need. On the other hand, Merchants are disconnected from the brands whose products they sell and find it increasingly difficult to get the products they need at the prices their customers can afford.
Supply-chain disruptions are a bigger problem in emerging markets, where billions of consumers are in danger of losing access to necessary everyday items like baby food, nappies, and pasta. With a lack of sales data and no market visibility, FMCG brands cannot penetrate these essential markets and can only reach a tiny fraction of prospective merchants.
If we do not take steps to transform the world’s supply chains, prices will continue to skyrocket, and product availability will decrease, leading to a potential crisis for millions of individual households and local merchants in developing economies.
How open commerce can help eliminate supply chain issues
If we view global trade as a person, then the supply and distribution chains are the veins and arteries, and any disruption in the essential flow of goods will be fatal – and make no mistake, the consumer goods industry is headed for a heart attack, if we don’t act fast.
What we need is a solution that digitally transforms the distribution chain in emerging markets and unlocks the immense growth opportunity in those markets – a true ‘sell anywhere’ economy powered by frictionless, open commerce where brands can connect directly with any merchant in any market.
RedCloud is the world’s first open commerce that successfully digitizes the B2B supply chain in emerging markets, providing brands with increased visibility across the entire supply chain by collating valuable data at POS. RedCloud connects brands and merchants on a single, digital platform, so brands and distributors can see in real-time where the demand for their products is and who is buying their products. They can leverage this data to devise new strategies to reach more merchants directly.
RedCloud also empowers merchants to trade directly with global brands, access more products, and gain increased visibility into locally available FMCG products. The platform also eliminates the cost and risks associated with cash by enabling digital payments between merchants, distributors, and brands.
Rising prices and empty shelves are signs that it is time to change how consumer goods are bought, sold, and distributed. By bringing local merchants into the digital ecosystem and championing open, digital commerce, we can improve every aspect of the distribution chain to benefit brands, merchants, and consumers worldwide.
Schedule a demo today to see how we empower FMCG brands, distributors, and merchants to sell smarter, buy better, and pay simpler.