TAKEAWAYS
SUPPLY CHAIN¤RELATED BANKRUPTCIES ON THE RISE We’re all familiar with the havoc wreaked by the clogged ports, long backorders, and scant raw materials supply of 2021 and 2022. While it seems like a distant memory now, some companies are still feeling the e ects—all the way to bankruptcy court. Corporate bankruptcy filings reached a 13-year peak in 2023 and are continuing at a steady pace—with many companies linking their financial troubles to pandemic- related snags in their supply chain such as the inability to acquire essential components and materials, oversupplied inventories, and labor shortages, finds a recent S&P Global Market Intelligence report. For instance, appliance parts manufacturer Robertshaw US Holding Corp., automotive parts retailer PARTS iD Inc., and co ee trader Mercon Co ee Corp. all cited supply chain issues in recent bankruptcy petitions, according to S&P Global. To stave o future bankruptcies brought on by supply chain disruptions, many companies are increasingly rethinking and investing in their supply chains to safeguard against potential risk events, notes the report, which singles out Target Corp. as an example. The mega retailer has been transforming its supply chain through automation, artificial intelligence, and machine learning to improve demand forecasting and inventory positioning. “Without huge investments in stores, supply chain, and tech, there is no drive-up or order pickup, which were monumental growth drivers during COVID and today,” said Target CFO Michael Fiddelke during a March earnings call. Should we expect the pace of supply chain-related bankruptcy filings to persist? Seems so. “Absent significant changes to wage growth and inflation that could accelerate the Fed’s rate cut timeline, the pace of U.S. corporate bankruptcies is unlikely to slow significantly before the end of the year, with disrupted supply chains remaining a key risk factor,” the report notes.
SPOTLIGHT ON SUSTAINABLE SOURCING ESG and sustainability continue to top the agendas for retail operations worldwide. What are some of the key trends and how are they impacting the retail sphere? A new study, Retail Sourcing Report: 2024 Supply Chain Sustainability Trends , released by TradeBeyond, digs into these concerns. The report analyzes emerging ESG trends as well as regulatory shifts and the innovative practices reshaping retail sourcing. Key highlights include: • Corporate sustainability commitments: More than 80% of respondents intend to increase investment in environmental sustainability projects within the next year, indicating a growing prioritization of ESG goals at the executive level, particularly in the areas of renewable energy, ethical sourcing, and sustainable packaging. • Ethical sourcing yields ROI: With ethical sourcing becoming a critical consumer expectation, brands focusing on transparency and sustainability in their supply chain are poised to build stronger trust and loyalty. • A growing sustainability market: As companies gear up to respond to increasing consumer and legislative demand for eco- friendly products, more suppliers of sustainable materials and packaging, as well as service providers, are helping them. The global sustainability market in retail and CPG is projected to grow at a CAGR of 9.1% from 2024 to 2029. • AI enhances ESG reporting: The integration of AI in ESG risk management is expanding, with a focus on improving the accuracy and e§ciency of emissions reporting and environmental data processing. • Sustainable fibers adoption lags: Despite the availability of sustainable alternatives to traditional fibers, the textile industry’s adoption rate is slow, signaling an opportunity for innovation and market leadership. • Regulatory landscape tightens: ESG regulations increased by 155% over the past decade and are set to continue that pace in 2024, which sees the introduction of new sustainability disclosure requirements in the UK and a European Union crackdown on misleading product sustainability claims.
Source: S&P Global
May 2024 • Inbound Logistics 17
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