Craft Focus - December 2020/January 2021 (Issue 82)

87 BUSINESS FEATURE MONEYCORP www.moneycorp.com NAVIGATING RISK – RETAILERS VS E-SELLERS With all the uncertainties over the next year, it’s crucial that each business takes action to ensure the best outcome with adjusted supply chains. This could be through partnership models with a ‘partnership ethos’, or a Just-in-Time (JIT) delivery system – where a product is only ordered from a manufacturer once the customer purchase has been made. However, a JIT option may not be suitable for all retailers, as we saw during the first UK lockdown. Retailers could also look to implement advancing technology in their business model. For example, utilising the Internet of Things (IoT) for real-time information. While this type of software is a considerable investment, the systems can provide insight and information into the weakest point of a supply chain, allowing companies to adjust accordingly in order to avoid major issues down the line. All businesses need to have a back-up option for suppliers in their chain, so there are contingency plans in place should option one not work out – pivoting an EMEA business model to a global operation. However, this does mean that companies need to be aware that in navigating the risk to supply chains, you increase the risk of working in multi-currencies. Which is why if this is the route a company choose to go down, it’s vital that they engage with a FX and international payments specialist like moneycorp, so the provider can take this risk on board, and the retailer can focus on running the businesses. To put currency risk into perspective, a conversion of one million GBP to EUR in February, compared to April, saw a difference in exchange of £123,600. For dollar to sterling, this saw a difference of £136,500. These variations can significantly impact the bottom line of low margin businesses, who may already be struggling amidst the widespread closures in the economy, labour shortages, logistics, and unusual consumer buying behaviours. Furthermore, if you look at retailers vs. e-sellers, there are different ways in which they can plan to alleviate risk, based on requirements. The primary difference is that, for e-sellers, having an international bank account or allowing more customers to purchase with an IBAN make multicurrency exchange a lot more straightforward. It will also open up the business to a wider customer base outside of their country of origin, and allows them to compete with businesses based in overseas geographies. LOOKING FORWARD While we aren’t able to tell the future, we do know that life throws curveballs at us, and businesses need to be prepared to catch. Whether it’s a global pandemic, Brexit, or whatever else lies ahead, it’s vital that companies have plans in place to manage their supply chain, be it global, national or local. Only by shoring up your supply chain can you help to mitigate future risks.