I sat in on a fascinating discussion on Supply Chain, and the intersection with Accounting. The objectives of the roundtable are as follows:

  • To explore the role of supply chains in entities and how finance teams interact with these.
  • To explore how finance functions contribute effectively to supply chain activities.
  • To consider the current supply chain issues that organisations face and the impact of the pandemic has changed these.
  • To consider how developments in supply chains are impacting the finance teams.
  • To explore the nature of the ongoing relationship between finance and procurement teams.

Here are some of the takeaways from the conversation.

A collapse in good behaviour happens very quickly when there is a supply chain issue. Think PPE, Petrol, Toilet paper… Overreaction can increase prices.

In 2019, we were in a good position to move forward and embrace ethics and sustainability in our supply chain, however with current and future issues, will this movement suffer? I suspect the answer is yes.

The pandemic and Brexit have fastened supply chain issues. Refer to the table showing a dramatic increase in disruptions, comparing the first half of the year, year on year. For example, since 2019, there has been a threefold increase in factory fires. (Why? Vacant factories due to the pandemic? Vandalism? Lack of upkeep? Insurance claims?)

Also, there’s an increase in ship traffic that can’t dock, and container rent has apparently doubled. Interestingly the ship traffic can be monitored on live sites https://www.marinetraffic.com/en/ais/home/centerx:43.6/centery:-0.4/zoom:3 (admittedly I’m not sure what the legend is, so can’t tell exactly what it is telling me.) Costs are spiralling upwards. It’s likely this will have a massive impact on inflation.

There is live supply chain technology (alternatively known as a Control Tower) that alerts you to identify partners’ changes, supply chain risks & industry news. An example is https://www.seraitrade.com/

While this may on the surface seem like a big business issue, if you jump in the local Facebook groups, many of the small construction and renovations are blowing out due to lack of supply and increased prices. Specifically (and weirdly) around roofing materials.

Small business owners need to be supply chain aware and consider whether there will be issues and preemptively mitigate those issues. Accountants & Bookkeepers are in a position to educate their client base, to be supply chain aware. Business owners need to have a detailed awareness of where their supply is coming from, and whether they need to be concerned about supply.

Accountants & Bookkeepers can also help businesses, by talking to them about potentially moving away from spreadsheets to inventory management software, rethinking ‘just in time supply delivery’, and revisiting cash flow strategies.  Payment terms for goods normally delivered in 30 days that are now delivered in 100 days may need to be redefined.

Finally, here are the links to our conversations held on the Xero Mastermind group, which I facilitate, for advanced Xero partners and integrators keen to explore the ecosystem! The links to the associated posts on FaceBook:

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