Andrew Penny, March 30 2021

Problems and Opportunities as we Lurch into the Roaring 20s

Everyone I speak to and everything I read is pointing to a tremendous surge in demand for almost everything. Canada is sitting on about $100 billion of excess savings, which is looking for somewhere to go, and the US is spending trillions on recovery. It also has a huge personal savings stash that's going to go somewhere. We have got people locked up for the last year or so, and all that emotion and all that saved money leads to insane demand.

However, there are big supply problems. Raw materials providers and manufacturers have slowed down their production during the pandemic. As a result, they are now desperately trying to ramp up production as quickly as possible, but they are months away from hitting capacity. And to compound the manufacturing problem, as I am writing this there are 20,000 containers stuck sideways in the Suez Canal and another 450 ships waiting to get through. Normally, 50 ships pass through the Suez Canal every day. Annually, the Suez Canal passes through up to 12% of the world's GDP. (Just imagine the global impact if the blockage was intentional.)

So now we find ourselves with an unprecedented surge in demand driven by money and emotion, tempered by shortages of finished goods, raw materials and really nasty supply chain vulnerabilities.

It is at times like this that the bold find opportunities of a lifetime. If you are a buyer:

• look to non-traditional providers such as South America or Eastern Europe that avoid extended and vulnerable supply routes and are in closer time zones
• leverage your customer knowledge and relationships to find alternate ways to address their needs ("nobody wants a drill bit - they want a hole").

And if you are a manufacturer,

• lead your sales story with supply chain diversity.
• If you are entering a brand new market change the way the game is played and read our report: Asset Baggage.

We are indeed moving into the roaring 20s, but there are some challenges created by vulnerable supply chains and manufacturing capacity where demand is outstripping supply.

Use some of the ideas above to roar with the best in the coming decade.

Written by

Andrew Penny


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