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Price increases – how to safeguard your programmes

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Unstable global markets are having widespread implications for day-to-day life. The causality is many fold – and prices have been on the increase for a few years. More recently, Brexit, the global pandemic and the war in Ukraine is compounding an already volatile global market. 

Currently, we are experiencing raw materials becoming harder to secure and commodity prices are extremely volatile – and this may not be a temporary phenomenon.

The commercial view of resorting to a policy of holding back and waiting for processes to normalise is one that history tells us inevitably results in failure – and in the current climate this philosophy remains as relevant as ever. Those who improvise and adapt to new market conditions will, ultimately, have the competitive edge; grow stronger; be more profitable.

On a daily basis, raw materials have unforeseen obstacles that are destabilising supply chains and making it difficult for manufacturers to remain in the black. 

We, along with our partners, are doing our utmost to either absorb additional costs; create new ways to mitigate expenses; minimise the inevitable ‘passing price increases along to customers’ – who are increasingly becoming reluctant to spend.

Buyers must consider alternatives. Collaboration with suppliers and partners who are agile and flexible to adapt to the changes in the marketplace will contribute to minimise the impact of rising prices.

In addition, pioneers of business models that enable customers to retain ownership of the products they have purchased will have a long term benefit.

By following a systematic approach that focuses attention on resources throughout your programme, suppliers and partners (manufacturers) can exploit a broader landscape of opportunity; secure better prices; minimise the impact of the inevitable rising costs in the future.

The areas that we identify that are volatile are not going to surprise anyone. Nonetheless, here is our checklist for consideration when reviewing your programme:

  • Labour
  • Raw materials:
    • Paper
    • Textiles
    • Steel
    • Timber
  • Logistics (fuel)

How can you mitigate the challenges of volatile rises in pricing?

  • Look at the BIG picture

Take some time out and look at your entire programme. What are the materials you will need in the coming year – not the next quarter. Look at all your activities as a whole – not as individual activities. Reflect on where future purchases can be consolidated and brought forward with the current activity.

  • Consolidate purchases

Many programmes have common features and attributes – materials that are identical. Some materials might even have an alternative or even be amended and adapted to grow the volumes that can be purchased. In larger volumes across multiple programmes, these materials can be stored and called off as required. Storage is increasingly becoming a less expensive consideration!

  • Future proof your annual budget

Most clients have an annual budget. We’ve had many clients that, at the end of their financial year, ask for an invoice to cover their ‘use it or lose it’ surplus and we work it off in the next financial period. Use this budget now! In light of the hikes in prices we are experiencing, it will be cost effective to do so. Your budget will go further today than it will later in the year. Even investigate if you can go beyond the current budgeting period if you can exhibit savings that are significant.

  • Streamline your processes to purchase

Get your ducks in a row. We all have to adapt to this almost unique experience.  Marketing teams that have undertaken a process like that which is described here and found savings  will need to tee up purchasing and finance too. In the current climate, some material prices can only be held for a few days. Once the price has been provided, seal the deal! Supply the purchase order quickly and adhere to the payment terms. Failure to do so will probably result in the order being retracted quicker than you can approve it – let alone pay for it.

  • Minimise your logistical activity

This is an area where we often find considerable savings by being agile about how we are getting what to where; upscaling our resources; reducing the overall logistical package. Sometimes, however, there is a need to simply ‘get the job done quickly’. Try to avoid these moments and mitigate the unnecessary cost. Or, if it is absolutely necessary, consider how to add to consignments and maximise this activity.

In conclusion…

The unstable and volatile global markets will continue to have widespread implications for some time to come. Nonetheless, the world will keep turning and we will have to adapt. Some of the practices that we have considered as the  ‘standard’ will fail in the current market. For the foreseeable future, we need to think differently to stay ahead of the game – improvise; adapt; overcome is the new mantra!

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