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Supply chain disruption and scenario planning

What could and should proactive finance professionals do about interruptions to their normal supply?

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I spent Saturday driving from the Midlands to the south coast through increasingly desperate scenes at England's petrol stations and wondered if there was anything the finance profession could have done collectively to avert the situation or at least mitigate the worst impacts.

It's not as if we weren't warned. Back in June, the Road Hauliers Association and Cold Chain Federation were warning about the shortage of lorry drivers.

When you hear something like that, what's your response. Does anyone have the time to work with clients in affected sectors on mapping out different scenarios and forecasting their potential impacts? And if you do, how do you go about the process?

More to the point, how would you try to mitigate any impacts? If anyone has been wrestling with these issues in teh retail or transport sectors, I'd be particularly interested to hear your experiences.

I grappled with similar ideas back in Jan 2020, when I published an article on How to keep your head when uncertainty grows

To my shame, there's no mention of a worrying pneumonia outbreak in China. I wish I could claim that the techniques I wrote about aided my own approach to managing through the pandemic, but I was just as reactive as everyone else, up to and including the UK government.

I'm determined to think more strategically about issues like these and would welcome any advice members have for a Petrol shortage crisis follow-up article.

Replies (19)

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By Paul Crowley
27th Sep 2021 18:18

I would expect organised clients to be in a position to sort this out
If a client has drivers then I would expect them to be more aware than most of us

This was so avoidable
There have been so many drivers complaining about conditions for so long.

Odd that people tolerated shortages in the shops and restaurants.
But fuel?
Different thing
Surprised that Motorway services were only selling fuel to LGVs
Not the normal pattern at all

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Replying to Paul Crowley:
Psycho
By Wilson Philips
27th Sep 2021 22:13

Paul Crowley wrote:

This was so avoidable

Certainly not helped by the media. I know that they’ll claim that they’ve got a duty to report the news, but seriously - exactly what benefit was there to anyone in reporting what was a minor hiccup for a few BP filling stations? Sometimes the media just need to develop a sense of responsibility and keep their trap shut.

And everyone knows that as soon as a government spokesperson tells the public not to panic buy they are going to do exactly the opposite.

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Replying to Wilson Philips:
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By Hugo Fair
27th Sep 2021 22:54

Yeah ... it's amazing the tin-ears of public spokespeople (in all spheres).

The worst I've personally experienced was back in the late '70s when, just after take-off from Tunis (and still climbing), the public address crackled into life and announced "This is your captain speaking - there is nothing to be alarmed about but .." The rest was drowned by the screams and general pandemonium of the majority of passengers - despite what eventually turned out to be a fairly anodyne message about condensation in the overhead lockers!

The media feeds off this frenzy and nowadays my experience would have been worsened by all those numpties who think it's their destiny to be 'famous' for 5 seconds by posting camera-based videos that actually show nothing of value.

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Replying to Hugo Fair:
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By Tax Dragon
27th Sep 2021 23:10

All things are wearisome, more than one can say. The eye never has enough of seeing, nor the ear its fill of hearing. What has been will be again, what has been done will be done again; there is nothing new under the sun.... if you can keep your head when all about you are losing theirs and blaming it on you...

(God and Kipling respectively - but you knew that.)

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Replying to Wilson Philips:
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By Paul Crowley
28th Sep 2021 09:28

What was reporting Non news became the cause of the non shortage
The fuel is just in thw wrong place, but people's reactions are now keep all petrol tanks full

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Replying to Paul Crowley:
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By Hugo Fair
28th Sep 2021 12:03

'Twas ever thus ... it's the same with a 'run on a bank' - in that there's no problem until everyone wants all their money out at the same time.
When macro-economics are so dependent on human confidence factors (instead of nice easy mathematical numbers/rules) - and these factors can be manipulated by the media (whether for profit or at the behest of cronies/politicians/etc) - then you get what we've just seen (as we did last year with loo-rolls and on many other occasions).

As an individual (person or business) you can join in the game (by attempting your own disaster/pinchpoint forecasts), but really such disaster recovery plans are just gambles ... like betting on the stockmarket or, for the brave, on futures.
Despite what the MBAs will tell you, you're probably best to avoid leveraging to the max /and retaining 3+ months cash cover / and being prepared to act fast (in terms of saving costs and/or grabbing a new niche).

Do what nature does ... learn to live with and adapt to the stresses that come along - don't try to control them unless you positively enjoy the resultant chaos.
This may be my Mediterranean ancestry showing itself, but it's worked for me.

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Replying to Hugo Fair:
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By Hugo Fair
28th Sep 2021 12:07

At a different level, what govts should do (and more importantly say) is covered rather well in a recent article by the BBC's Economics Editor at https://www.bbc.co.uk/news/business-58709019

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Replying to Hugo Fair:
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By Paul Crowley
29th Sep 2021 16:58

A good read

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Replying to Hugo Fair:
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By Tax Dragon
04th Oct 2021 10:09

Hugo Fair wrote:

At a different level, what govts should do (and more importantly say) is covered rather well in a recent article by the BBC's Economics Editor at https://www.bbc.co.uk/news/business-58709019

A person is smart. People are dumb, panicky dangerous animals and you know it.

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Replying to Hugo Fair:
paddle steamer
By DJKL
29th Sep 2021 17:17

The stockmarket is not really a gamble, it is merely one of the possible hedges against the near certainty of inflation savaging savings that might work might not work, the 3.30 at Kempton is a gamble, the stockmarkets, with well diversified holdings, should not really be lumped in as a "gamble."

You will be hard pressed to find anyone with a spread of say 15 holdings held over 20 years ,that he/she never trades, who has lost money with dividends reinvested included, to have lost they need to be the unluckiest person alive picking only lemons, there may have been better alternatives but that is mere opportunity cost not loss.

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Replying to Paul Crowley:
paddle steamer
By DJKL
29th Sep 2021 17:06

Shortages in shops you have an alternative, no Kit Kats, well double stuffed Oreos will suffice, but you cannot stuff lumps of coal in your fuel tank (well you can but it is not a clever idea)

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By Duggimon
30th Sep 2021 09:59

I had half a tank of petrol when all this kicked off, I've just ignored the whole thing and driven on my half tank. Now I've got a quarter tank and the garages have restocked.

The whole shortage was a gigantic nothing. The Co-op still hasn't restocked their Linda McCartney veggie burgers though, which is alarming, but I can get them from Tesco so it's not all doom and gloom.

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paddle steamer
By DJKL
30th Sep 2021 11:28

I think the real test for industry comes if coffee supply becomes problematic, that will certainly be when my productivity goes to zero.

Also think I likely need to stockpile essentials for Christmas, buy in some scotch (low on Jura) and get the other half busy making fruit cakes whilst we can still get the baking materials (I only finished eating last year's cake last month, they keep really well, as do Dundee cakes)

Re CO2 shortages I am currently making my own wheat beer (kit), 23 litre bin finishes its ferment likely this weekend, then rack, bottle and start another (if I can find the space maybe 2 or 3 could be ongoing at the same time though would likely need to buy more bottles)

So, that will be all the main essentials sorted, coffee, beer, whisky and cake- bring on the Apocalypse.

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Flag of the Soviet Union
By thevaliant
04th Oct 2021 10:20

Retrain as an HGV driver?

(Seriously - us accountants have far too much self importance)

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Replying to thevaliant:
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By Tax Dragon
04th Oct 2021 10:56

thevaliant wrote:

us accountants have far too much self importance

uk ones can have pretty inflated egos also.

Strange thing is that, while there are loads of shows about trucking (Ice Road Truckers, American Trucker, Truck Stop USA... there's even one called "World's Toughest Trucker"), I'm struggling to think of any about accountancy. TV channels' loss I suppose, as I'm sure such shows'd attract an appreciating audience.

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Replying to Tax Dragon:
paddle steamer
By DJKL
04th Oct 2021 11:42

There was the film, "The Accountant", the weapons were an interesting add on to using a calculator.

There is also Gene Wilder as Leo Bloom in "The Producers"

However you are correct, re TV we have really not got our foot in the door with the broadcasters.

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Replying to DJKL:
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By Tax Dragon
04th Oct 2021 11:56

And Elliot Ness, of course. There must have been things with him in. Yeah here we go... the old searchy friend soon finds a 1959 TV series The Untouchables.

I wonder who his current equivalent is at HMRC.

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Replying to Tax Dragon:
paddle steamer
By DJKL
04th Oct 2021 12:34

Was he actually an accountant?

https://en.wikipedia.org/wiki/Eliot_Ness

It looks like he went after the booze side of the business and another team finally nailed Capone re the tax evasion.

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Replying to thevaliant:
paddle steamer
By DJKL
04th Oct 2021 11:25

I do like Yorkies.

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