May 12, 2022
The fueling war between Russia & Ukraine has affected the global economy. Many industries around the world economy are affected in multiple ways. Russia, the world's third-largest oil-producing nation, plays a crucial role in B2B trade.
The oil prices worldwide have risen to death, and despite all the preventive actions, its impact can be seen in the overall trade business. The high costs of oil and gas make it difficult for B2B markets to remain profitable. The crisis has affected everyone, from wholesalers to consumers. The constant hike in global oil and gas prices and the reduction of Nghi Son Refinery and Petrochemicals LLC's output have worsened the situation. Let's do a critical analysis to understand why this is happening & what B2B suppliers can do not to hit the bottom line.
Businesses exporting overseas have to pay a higher shipping cost than before
The component manufacturer, wholesaler, and everyone involved in the chain has to double up the price of the product or services. This is done to balance out the rise in transportation costs.
Around 30 nations are turning towards their oil reserves to mitigate the price hike issues. But, the move is very uncertain, and speculations are being made about whether this will give some benefit or it will turn out to be just a futile effort.
In such a turmoil, B2B units must restructure the ways they've operated so far. Here we list several ways to do so. Six ways businesses can make themselves ready to cope with the hike in Oil & Gas Prices.
The B2B suppliers & companies manufacturing different items like medical devices, pharmaceuticals, and automobiles highly depend on overseas sourcing components. These businesses must do proper vendor management to cut down the shipping and procurement costs. Finding quality partners nearby can be an excellent strategic move that will benefit them over a long time.
Wholesalers should look out for potential buyers in the local areas so they don't need to ship to a far-off location.
The weight & volume of the product is two large brackets in which the items should adequately fit for the optimized cost of Shipping. The exporters can redesign their Packaging so that the weight of the items is significantly reduced. Reconfiguring the Packaging can help you cut down the cost.
The prices of parts and components for different B2B marketplaces, especially manufacturing, are constantly rising.
Electronic Medical device development manufacturers, Automobile Manufacturing units, and every other sector where the dependency lies on export have faced a supply chain challenge since the COVID-19 shutdowns.
This crisis has fueled the struggle and made it more challenging to maintain a smooth delivery pattern. In such scenarios, pre-planning and inventory management are the only ways that can help in striking a balance.
The manufacturers should place their orders early to get the raw material and parts at a minimal cost. The constantly rising oil & gas prices will affect the procurement cost, and pre-planning can help you remain profitable.
False promises are worse than no promises at all. Make sure the communication about your delivery dates and turnaround time are evident. This applies to all levels, from your vendors to your customers. Keeping your client's or customer's illusionary timelines can spoil your deal. Communicate with data and be very clear about when the orders will be delivered. The current situation requires no testimony, and your clients will surely understand when you communicate with realistic data and dates.
Setting up a shorter and cost-effective way to reach out to suitable locations is another way. Critically breaking down your timelines and shipment mode can also help businesses optimize costs. By Re-exploring the supply chain, we mean re-looking for efficient ways to cut logistics costs. Whether it's packaging, vendors, or mode of shipment, tracing out the best pathway can only help you remain profitable in the long run.
Design or composition management is another way you can optimize cost. Replace the component that requires long Shipping and a high price with a more accessible feature. If a minor change in the sourcing helps and it doesn't affect your product's quality, it's wise to go for a local part rather than an exported one that requires a higher cost.
All of these factors can have a significant impact on B2B trade. The rising oil prices have affected the market very badly, and it is impossible to predict how oil prices will evolve over the next decade.
A strategic approach of re-looking at the supply chain can optimize cost and protect your business from hitting the bottom line. The B2B suppliers can also opt for listing on global wholesalers platforms, where you get regular offers and discounts on Shipping and trade. We have to fight with the rising oil prices till some good news hits the ground.