Introduction

The world watches in shock and horror at the ongoing events in Ukraine. The devastating violence and violations have led to a significant disruption in wheat production, a vital export for Ukraine that supports the Middle East and North Africa. This has resulted in record-high prices, exceeding those during the economic crisis of 2008-2011. Over the past century, wheat prices have heavily influenced the costs of energy-rich agricultural commodities and other raw materials.

Currently, a major price increase seems unavoidable, and we are already witnessing the initial signs. Given that raw material prices are expected to fluctuate over the next two years, and retailers will strive to keep prices low, food processors must take action. It’s essential for food processors to closely monitor their supply chains and working capital to avoid getting caught in the middle and risking operational decline.

While this may seem obvious, the reality of liquidity budgeting is that forecasts rely on historical events and successes, making it difficult to predict future crises. A well-designed supply chain dashboard that tracks both product flow and liquidity is crucial for effective cash flow and liquidity management while navigating supply chain complexities. Achieving end-to-end visibility allows businesses to know the status and location of goods at any time, particularly within multi-layered supply chains, thereby optimizing inventory.

Understanding the cash flow related to the movement of goods provides better control in these unpredictable markets. Although forecasting is inherently challenging, utilizing scenario planning can be beneficial: consider potential developments and alternative outcomes. What are the best-case and worst-case scenarios? How would your supply chain be affected if prices remained at peak levels for two years? What measures are necessary to ensure continuity? Document these considerations, attempt to budget for them, and factor them into your pricing. Simply working through these scenarios will enhance your insight and control, reducing the likelihood of surprises.

Conclusion

In normal circumstances, a supply chain dashboard aids in optimizing returns; however, in these extraordinary times, it can mean the difference between a successful and failing business. VAA Data Works and FoodInsights collaboratively provide tools to swiftly and easily create dashboards and budgets based on existing financial and ERP systems. A lack of tools should never serve as an excuse for inaction! Are you ready to take action for your company’s liquidity? Reach out to us at info@foodinsights.nl.