Global Supply Chain Conference in Barbados Addresses Rising Costs and Challenges Faced by Developing Economies

Product Shortages: Disruptions lead to stockouts and limited availability of certain products.

Longer Waiting Times: Delays in getting products from factories to stores result in longer wait times for consumers.

One key point noted from the first day of the UNCTAD conference is the role of small and medium enterprises in supply chains. This sector is arguably the engine of growth for economies and more so, the catalyser for social justice and enfranchisement of societies’ vulnerable – women and the youth. The conference therefore underscored “the difficulties faced by SMEs in accessing global supply chains and the necessity of financial inclusion to support their participation. Programmes aimed at upgrading technology and decarbonising SME operations were mentioned as ways to help these businesses enter export markets and comply with increasingly stringent environmental standards”.

Several small business administrators and business owners agreed with the conference’s summation and opined that the provision of adequate financial resources is needed to build resilient and sustainable SMEs. The addition of the digital transformation agenda further compounds the capacity vulnerabilities of small businesses to navigate supply chain disruptions.

The deleterious impact of such disruptions was evidenced in the world’s largest economy in an article on USbank.com which showed how supply chain disruptions can contribute to inflation. These disruptions were a major factor in the rise of inflation in 2021 and 2022 in the US. Inflation declined from a peak of 9.1 per cent in June 2022 to 3.2 per cent in February 2024 as issues with supply chains began to normalise.

There is a positive correlation between price increases and Inflation: Disruptions cause a shortage of available goods. When demand for goods remains high, prices rise significantly. This is evident in the example of the COVID-19 pandemic where high demand for goods coupled with production limitations led to a surge in inflation.

Individual consumers and businesses feel the impact of price increases: Consumers are at the receiving end of these disruptions. They face limited availability of certain products or are forced to pay a much higher price due to scarcity. A recent example of this was seen with the disruption in the supply of building materials, which created a scarcity in the market and the resultant price hikes for lumber and related construction materials.

Research done by o9 Solutions showed how supply chain disruptions impacted consumer behaviour.

More than half (52 per cent) of surveyed consumers reported experiencing supply chain disruptions in the past year.

Nearly half (49 per cent) of consumers faced difficulty finding products they typically buy.

These disruptions have led to changes in how consumers shop, resulting in

Cost-conscious choices: Over a third (38 per cent) stopped buying certain items due to price increases.

Increased comparison shopping: 35 per cent reported doing more comparison shopping to find better deals.

Prioritisation: 33 per cent adjusted their buying habits to prioritise essential purchases.

An assessment of the consumer’s confidence in supply chain functionality revealed that 38 per cent believed supply chains were working well; 39 per cent lacked confidence in their performance and 24 per cent were unsure about how well they function.

Consumers perceived there were a number of reasons for supply-side disruptions, with 58 per cent indicating Inflation was the biggest driver, followed by labour shortages, transportation issues and geopolitical factors.

Hopefully, during this week many of the solutions to this global crisis will be explored. For sure, SIDS in the region can begin to look inward and discuss a regional industrial policy to rationalise the production of key commodities for the Caribbean, address the issue of transportation to get these commodities across borders quickly and cheaply and harness the investment capital in the region for the development of the private sector.

The Small Business Association of Barbados (www.sba.bb) is the non-profit representative body for micro, small and medium enterprises (MSMEs).