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AGRICULTURAL SUBSIDIES: EVERYONE’S DOING IT

agricultural subsidies

AGRICULTURAL SUBSIDIES: EVERYONE’S DOING IT

Everybody’s Subsidizing

$700 billion every year – that’s how much governments worldwide provide in some form of subsidy to their agricultural sectors. Researchers behind the OECD’s “Agricultural Policy Monitoring and Evaluation 2020” report found that the 54 countries studied (all OECD and EU countries, plus 12 key emerging economies) provide over $700 billion a year in total support to the agricultural sector. The vast majority of this, $536 billion, is in the form of payments to producers; the rest takes the form of consumer support and enabling services such as infrastructure investment or research and development.

Subsidies are in part, a recognition of the unique challenges that the agriculture sector faces – and the important role it plays in our society by ensuring food security. Farming is highly weather dependent and extremely vulnerable to uncontrollable events such as natural disaster. Agriculture also requires significant investment from producers in expensive equipment, inputs and labor before any profit can be made, and faces an obvious time delay between shifts in demand and supply.

700 billion

However, agricultural subsidies can also have trade-distorting effects. For this reason, they are the basis of many international disputes. In the recently negotiated U.S.-Mexico-Canada Agreement agricultural subsidies played a key role: Canadian dairy subsidies were perhaps the biggest agriculture-related sticking point for the U.S., and Mexican tomato subsidies continue to cause tensions. Across the globe Brazil, Australia and Guatemala have disputed India’s subsidies to its sugar industry.

The complaint from least developed countries is that global subsidies disproportionately disadvantage their small producers, whose own governments cannot provide the same support, leaving them unable to compete with the heavily-subsidized farms of richer countries. Communities say that foreign products, such as European milk, are flooding their markets, crippling local herders and farmers and leaving consumers vulnerable to price changes.

The United States has borne the brunt of criticism for its agricultural subsidies. American farmers receive billions in support. However, when measured as a percentage of total farm revenues, South Korea, Japan, China, Indonesia and the EU all provide producer support above the global average of 12 percent, whereas the United States, along with Russia, Canada, and Mexico have historically been at or below this average.

China more than

Who Subsidizes the Most?

The tables below show the largest subsidizers ordered by total spending, and by percentage of gross farm revenues, according to the data collected by the OECD. Smaller countries like Norway, Iceland and Switzerland top the tables when it comes to support as a percentage of gross farm revenue at 57.6 percent, 54.6 percent and 47.4 percent respectively. The United States does not even make the top 10 on this measure, with total producer support calculated at 12.08 percent.

In terms of total spend, China, the EU, and United States comprise the top three. However, China spends almost four times as much as the United States, and more than the next three biggest spenders – the EU, United States and Japan – combined.

ag subsidies tables

Exactly how and to whom subsidies are dispensed differs widely by country, as do the goals of agricultural subsidy programs. Here we look at a few of the biggest subsidizers: China, the United States, Japan, and the EU, as well as the case of New Zealand, a nation with virtually none.

The United States

Throughout most of its early history, the United States did not subsidize agriculture. A nation largely founded by farmers and land workers held agriculture in high esteem, but was determined that no other group should be taxed to fund another. However, the Great Depression of the early 1900s and the presidencies of Hoover and Roosevelt reversed this. Hoover established the Federal Farm Board which fixed market prices for certain produce, inducing excess production of the supported items. Roosevelt supported the Agricultural Adjustment Act (AAA), which paid farmers not to produce in order to reduce agricultural surpluses.

In 2019, OECD data show that the United States provided agricultural support of over $48 billion, however, close to half of this was in the form of support to consumers through nutrition assistance programs. Federal support to agriculture has shifted and changed with various administrations, with the five-year Farm Bill being the primary legislative vehicle used to implement changes to the “farm safety net“, including government subsidies.

Under the rules of the WTO the United States, along with other developed countries, agreed to set limits on spending. The U.S. limit is $19.1 billion on certain types of “market distorting“ support. However, the latest data shows that direct support to farmers in 2019 was the highest it has been in 14 years, at around $22 billion, leading to questions about whether the United States exceeded its annual limit on “amber box” spending.

This spike is largely attributed to recent ad-hoc compensation to farmers, unrelated to the Farm Bill and initiated by the Trump administration, to compensate farmers for unforeseen losses. To make up for lower prices and lost sales caused by the U.S.-China trade war, the U.S. government committed billions in dollars to farmers in 2018 and 2019 through the Market Facilitation Program. When COVID-19 hit, and the administration implemented another program – the Coronavirus Food Assistance Program – to help farmers stay afloat despite disrupted supply chains. All in all, government payments to farmers are projected to reach as high as $37.2 billion in 2020.

China 4x more

China

China began subsidizing agriculture in earnest relatively recently but has quickly become the world’s biggest subsidizer by dollar amount. Formerly the nation’s primary source of employment, the Chinese government for years taxed agriculture to support urban populations. In 2004, China first implemented subsidies to protect rural workers from foreign competition. Although it has now evolved into a manufacturing economy, roughly half the labor force is still employed in agriculture, with lower living standards than their urban counterparts. The Chinese government subsidizes rural farmers to prevent political instability, while bolstering the production of particular crops to reduce reliance on foreign produce, such as U.S. soybeans.

China’s agricultural subsidies have ruffled the feathers of other world powers, particularly the United States, which won a WTO case against the country’s unfair wheat and rice subsidies. The U.S. Trade Representative complained that Chinese subsidies undercut U.S. producers exporting their produce to China’s vast market. The WTO panel investigating the issue found that in 2012, 2013, 2014 and 2015, “China provided domestic support… in the form of market price support to producers of wheat, Indica rice and Japonica rice in excess of its commitment level of “nil””. Disagreements over subsidies remain a sticking point in the U.S.-China trade war.

China may be beginning to scale back its subsidies. After two decades of steady growth, the OECD data show that China’s share of gross farm receipts going to support producers has started to decline in the last two years. Given its astronomical spending it will take a long time for China’s spending to approach anything on par with the European Union, let alone the United States.

line charts on China spend

Japan

Japan’s agricultural subsidies as a share of gross farm revenues are two times above the OECD average, at 41.3 percent, remaining high despite over a decade of cutting back. About 80 percent of the support is in the form of market price support, artificially keeping prices at a certain level, which is achieved mainly by border controls for rice, milk and pork.

In their discussion paper for the International Food Policy Research Institute, Yoshihisa Godo and Daisuke Takahashi outline Japan’s unique subsidy landscape. Most Japanese farmers farm as a secondary business and have another stable source of income, yet they receive the same benefits as full-time farmers, without feeling the same need to innovate and compete. The political pressure these small plot farmers yield gives them much sway over farmland use regulations and other policies that benefit them, such as income compensation programs.

These issues result in inefficiency and a lack of productivity, helping to explain why Japan is the only country with a declining food self-sufficiency rate, entrenching established interests and driving away young potential farmers.

This puts Japan’s heavy agricultural protection in a category of its own. Whereas the action of heavy-subsidizers like Europe and the United States increase their agricultural output – in Japan it has decreased. This may help to explain why Japan is becoming more willing to reduce tariffs on agricultural goods, pledging to cut back such tariffs on pork and beef in their recent free trade agreements with the EU, United States and UK.

The European Union

Since 2010, government support to agriculture in the EU has been stable at around 19 percent. The EU’s Common Agricultural Policy (CAP) is an extensive EU-wide policy and their largest budget item, accounting for around 40 percent of the annual budget. It aims to support farmers, improve productivity, and safeguard the livelihoods of European farmers, while improving sustainability and protecting rural land. The EU’s outline of the CAP explains that farming requires special protections given its distinctness from other productive activities, such as its reliance on the weather and time delays. The CAP provides three forms of protection: income support through direct payments to farmers; market measures to combat price or demand drops; and rural development.

The centrally organized system however lends itself to opacity and corruption in the distribution of these subsidies in some member states where populist governments are able to capture the benefits and use them to reward friends and punish enemies. The burdensome administration process and system that doles out cash based on the amount of land-owned is also proving to be a roadblock for young farmers who access their land through non-conventional contracts or seek to start small – meaning they miss out on subsidies that are propping up their larger competitors.

Subsidies are also forming a key part of the UK-EU Brexit negotiations. UK farmers will lose out on billions of dollars of EU agricultural subsidies when the country breaks with the bloc, which will be a huge challenge for the government and the country’s farmers who will see a phasing out of subsidies they rely on to keep their farms afloat. But it will also provide an opportunity for them to take a new approach that rewards farmers who incorporate good environmental practices.

India and What’s Hidden in the Data

India is notably absent from these tables given that they are the world’s largest producer of milk, pulses and spices and second largest producer of rice, wheat and fruit among many others. They are undeniably an agricultural super power, so is it that they don’t subsidize? No, they definitely do, but the answer is a bit more complicated.

Indian farmers are aided by direct payments and large subsidies for inputs, such as irrigation water, power and fertilizers. Producers in India receive support corresponding to about 7.8 percent of gross farm receipts, as well as market price support of 2 percent. If we only take into account the positive support, India is subsidizing agriculture by over $11 billion. However, this is offset in the OECD data by what they term India’s negative market price support, which reflects the amount that domestic producers are implicitly taxed due to a series of complex domestic regulations and trade policy that more than offsets any gains they receive from subsidies to the tune of $77 billion, a -14.8 percent hit in terms of farm receipts.

Generally, developed countries such as OECD member countries have very low values for this negative market price support category, sometimes even zero. But other countries with restrictive domestic and trade policy – such as Argentina and Vietnam, which have negative support values of $11.4 and $5.2 billion respectively – hurt their producers in this way.

A World Without Subsidies? Just Look to New Zealand

Not all wealthy, agriculture driven countries rely on subsidies, however. Australia and New Zealand’s agricultural supports are just 1.85 and 0.7 percent of their gross farm revenues respectively. New Zealand in particular is a fascinating case. Its low agricultural support may be surprising given New Zealand is five times more dependent on farming than the United States.

In 1984 New Zealand’s government ended all farm subsidies, which at the time represented around 30 percent of the value of farm production. Despite fear and protests at the time, around twenty years after the action just one percent of farms had gone out of business and the value of farm output increased by 40 percent. By reacting to competitive pressure and consumer demand, cutting costs, and innovating, New Zealand farmers were able to rebuke the argument that agriculture needed government support to survive.

Effects of the “New Subsidizers”

Certain types of agricultural subsidies have trade-distorting effects, but their historical use among the biggest and wealthiest agricultural exporting countries provoked a “they’re doing it, so we should too” response. The biggest growth in subsidy use over the last decade has been among the fast-growing emerging economies such as China, India, and Turkey, clearly seen in the data from the OECD.

Given differing WTO rules on agricultural subsidies for developed versus developing countries, and the significant amount of spending particularly by China, this shift is important to recognize to both break old perceptions of who subsidizes and to ensure that new baselines are used to negotiate future rules on agricultural subsidies.

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Alice Calder

Alice Calder received her MA in Applied Economics at GMU. Originally from the UK, where she received her BA in Philosophy and Political Economy from the University of Exeter, living and working internationally sparked her interest in trade issues as well as the intersection of economics and culture.

usmca

NAFTA to USMCA: A Brief Overview of Significant Changes

The United States-Mexico-Canada Agreement (USMCA) became effective on July 1, 2020, 26 years after its predecessor, the North America Free Trade Agreement (NAFTA). While NAFTA was originally conceived during the 1980s, the free-trade block did not materialize until the early 1990s, in part as a result of the perceived need to counterbalance the effects of the then–recently created European Union (1993). Mexico was experiencing unprecedented economic growth under the administration of President Salinas de Gortari (1988-1994), an economist and the first non-lawyer elected into the Mexican presidency since 1958, while President Bill Clinton (1993-2001) was driving sustained economy growth in the United States that ultimately led to a US federal budget surplus from 1998 to 2001. Canada, on the other hand, had just elected Prime Minister Jean Chrétien (1993-2003), who had run, at least partly, on a promise to renegotiate NAFTA within six months, as he believed that the new free trade agreement negotiated by then–Prime Minister Brian Mulroney (1984-1993) made too many concessions to the Mexicans and Americans.

In contrast, the USMCA comes into effect in what undoubtedly are unprecedented times in modern history. Although there existed a consensus among member states that the tri-lateral agreement needed an update, no one could have predicted that its successor would be greeted by an economic downturn caused (or accelerated) by a crippling pandemic that has forced an almost complete shutdown of the Mexican and United States economies.

In addition, while the US-Mexico relationship appears relatively strong, the US relationship with Canada has been more strained, marked by intermittent friction between the two countries on a variety of trade-related issues, such as steel tariffs in the United States and dairy tariffs in Canada. Given this backdrop, it is hard to predict how smooth the implementation of the USMCA will be. For example, in late-July hearings in the US House, both parties’ lawmakers exacted promises from the US Trade Representative’s office that it would quickly and aggressively use the USMCA’s enforcement mechanisms, with those representatives revealing that some cases were “ready to go” and would be on file by this autumn.

The general consensus is that the USMCA achieves some notable changes and a number of incremental improvements. A full description of these changes is beyond the scope of this discussion, but the changes that will likely have the greatest impact relate to a few, select industries, and certain procedural changes, including the following:

Domestic Content Rules for Automobiles

Auto content rules were a major issue throughout the USMCA negotiations. The USMCA includes two significant changes to how cars will be made and when they can be declared as made in the United States. First, the USMCA increases to 75% (from 62.5%) the percentage of a vehicle’s parts that must be manufactured in North America. Although the 75% number has garnered most of the attention, the USMCA (as did NAFTA) actually includes different rules: Part content is divided into core, principal, and complementary parts with content requirements of 75%, 65%, and 60%, respectively. The content calculations will also be subject to the USMCA’s rules of origin, which do away with NAFTA’s tracing scheme as well as the concept of “deemed originating.” These changes will affect the automotive supply chain. For example, the USMCA introduces a new rule requiring that 70% of the total steel and aluminum used in an automobile must be sourced from North American suppliers. Combined with the elimination of the tariff shift rules for stamped products, this will require supply chain changes for a number of auto producers.

While there are broader labor rules incorporated into the USMCA, the primary focus is on the agreement’s new requirements that workers earning at least $16 per hour make 40% to 45% of a vehicle’s components.

In keeping with the findings of Section 232 of the Trade Expansion Act of 1962 relating to automobiles, the USMCA incorporates quotas for Canadian and Mexican auto imports. Although the quota is well above current rates, this provision likely will morph into an issue in future years.

Labor Laws

The USMCA includes an array of labor-focused provisions. One example is a requirement that the countries adopt and enforce labor laws consistent with the International Labor Organization. The signatories also agreed to effectively enforce labor laws, and not to waive or derogate from them. The USMCA also requires the countries to: (1) take measures to prohibit the importation of goods produced by forced labor; (2) address violence against workers exercising their labor rights; (3) address sex-based discrimination in the workplace; and (4) ensure that migrant workers are protected under labor laws.

The USMCA also includes an Annex on Worker Representation in Collective Bargaining in Mexico, under which Mexico commits to specific legislative actions to provide for the effective recognition of the right to collectively bargain. To fulfill this commitment, Mexico enacted historic labor reforms on May 1, 2019, and is implementing transformational changes to its labor regime, including new independent institutions for registering unions and collective bargaining agreements and new and impartial labor courts to adjudicate disputes.

The agreement also requires all businesses in Mexico to ensure that they are in compliance with all aspects of the USMCA, including the collective bargaining provisions. The United States and Mexico have established a Facility-Specific, Rapid Response Labor Mechanism (Labor Mechanism) to enforce the collective bargaining obligations through the imposition of remedies, which may include the suspension of the preferential tariff on goods manufactured by a breaching facility. The countries have already begun their appointments to these dispute-resolution bodies, and the US Trade Representative has testified that cases are already being identified for action in the fall of 2020.

Other Notable Changes

While NAFTA had no provisions relating to dairy, the USMCA increases the opportunity for dairy exports to Canada, long a contentious issue between the two countries, making the US Dairy industry a winner in the deal. As Alan Ross of Canadian law firm Borden Ladner Gervais LLP states “Under the new agreement, US dairy farmers receive access to about 3.5% of Canada’s $16 billion annual domestic dairy market. Operationally, Canada will provide new tariff rate quotas exclusively for the United States and eliminate certain milk price classes, changes which have proven unpopular with the Canadian dairy industry.”

Also, the USMCA (1) includes environmental obligations to, among other things, combat wildlife trafficking, address air and marine quality, and protect marine life and, as part of its environmental efforts, the USMCA provides funds for monitoring these environmental efforts; and (2) prohibits customs duties on digital products (i.e., products that are transmitted electronically, such as computer programs, videos, or music). This last issue alone merits further analysis and consideration, as digital taxes become de rigueur in Europe and elsewhere. Finally yet importantly, unlike NAFTA, the USMCA includes a sunset clause. The countries settled on a 16-year term for the deal, with a review to identify and fix problems and a chance to extend the deal after six years.

Monitoring and Enforcement

The signatories countries are to make every endeavor to arrive at a mutually satisfactory resolution of all disputes arising out of the USMCA.  However, if they are not able to reach a resolution, Chapter 31 of the USMCA provides the framework for dispute settlement. In it, the parties will first consult with technical experts in the hopes of resolving the dispute. Should that fail, a ministerial panel will review the dispute and submit a final report. If the final report finds that (1) the measure is inconsistent with a party’s obligation; (2) a party has failed to carry out its obligations under the USMCA; or (3) the measure is causing nullification or impairment of the scope, the disputing parties must try to agree on the proper resolution for the dispute within 45 days. If the disputing parties are unable to resolve the dispute within 45 days, the complaining party can suspend the responding party’s benefits of equivalent effect to the dispute.

The USMCA retains the binational panel reviews of unfair trade law matters. These include customs determinations, antidumping and countervailing duty determinations, government procurement, breach of the most-favored-nation treatment for investors (noting that Canada has opted out of the investment provision of the USMCA), and disputes involving public telecommunications services, digital trade, intellectual property, labor rights, and environmental obligations.

In a significant change from NAFTA, the investment chapter (Chapter 14) of the USMCA (1) only applies to the US and Mexico (given Canada’s withdrawal from investor-state dispute settlement regime – ISDS), and (2) narrows the circumstances under which cross-border investors can bring actions under the general rules of ISDS. For instance, the USMCA prevents many US and Mexican investors from asserting claims under the “fair and equitable treatment” standard, which is included in most international investment treaties and is a frequent basis for such claims. Exactly how this will impact cross-border activities remains to be seen.

Generally speaking, Chapter 14 provides access to international arbitration for general investments and covered government contracts subject to satisfaction of certain pre-arbitration conditions and limitations (including the exhaustion of local remedies and certain statutes of limitation). Investors (post—established investment) may seek protection for breach of national treatment and most-favored-nation treatment under the general investments protections. Further, under the government-covered contracts protections, investors in oil and gas production, telecommunications, transportation, certain infrastructure, and power generation may also be entitled to protection under the USMCA. Lastly, it should be noted that (1) the participation of Mexico and Canada in the Trans-Pacific Partnership (otherwise known as the CPTPP) will force all investors to take a fresh look at their options when seeking relief from wrongdoing by another state, and (2) the consent by Canada to ISDS for legacy investment claims will elapse three years after NAFTA’s termination.

As mentioned above, the USMCA also created the Labor Mechanism as a way to deal with labor disputes. In particular, the Labor Mechanism enables the United States and Canada to bring a dispute against a facility in Mexico that they believe is not in compliance with Mexico’s new labor laws. The Labor Mechanism permits the suspension of the preferential tariff as a remedy, the imposition of penalties on goods or services from the violating facility, or the denial of entry of goods from the violating facility.

* * *

While we remain confident that member states are invested in the growth of the North America region as a whole, and the consensus is that the USMCA does address some of the most relevant concerns of the parties to the tri-lateral agreements during the NAFTA years, it will be hard to really measure the USMCA’s true effects (whether positive or adverse) in the short and possibly mid-term given, among other things, the political and economic turmoil that has seen it take its first steps.

short order

TK Maxx – The Poster Child for Short Order Purchasing?

In the midst of the global pandemic, with a second wave threatening and further lockdowns looking ever more likely, retail experts have been championing the importance of e-commerce in order for businesses to survive the crisis – says Mina Melikova, CEO of TradeGala and owner of online fashion retailer – Goddiva.

Surely these extreme safety measures must have taken a toll on the company’s fortunes? Unsurprisingly, the company made a loss in the first quarter of the year with sales falling by 31%, but while other retail chains are studying administration procedures, TK Maxx has risen to become the UK’s sixth-largest retailer, taking over from the giant that is Arcadia Group’s Topshop. Company directors are reportedly looking forward to the second half of the year with confidence and are even looking to expand their high street presence with more store openings in the near future. So how did this discount chain store buck industry trends and come out of the crisis stronger than before?

The secret to its success, it seems, is in the company’s agile buying approach. Unlike other major retailers which purchase their stock months in advance, TK Maxx follows the short order purchase model, buying “little and often” according to current industry trends.

So while other major retailers were stuck with warehouse loads of bikinis and holiday fashion which was no longer of interest to a consumer base whose Summer holidays had been canceled, TK Maxx was able to reduce its purchasing during the enforced closure of high street stores and quickly react to customer needs, concentrating on more popular product ranges such as homeware and childrenswear upon reopening. Every item purchased goes directly to the shop floor, so there’s no guesswork or forecasting required – the purchasing team can react directly to immediate sales and plan the next investment accordingly. As other stores are looking for ways to offload unwanted stock, TK Maxx is now in the enviable position to be able to snap up deals from retailers around the world and pass these reductions onto their customer base which, in the current climate, is looking for bargains more than ever.

The Coronavirus crisis has clearly shaken up the fashion and retail industries. Major fashion houses are looking to move to more “seasonless” designs, and away from the relentless five-season a year fashion calendar which until now has been at the heart of traditional sourcing methods. The bi-annual fashion weeks predicting trends months in advance, the never-ending trade show seasons around the world, the forward ordering of stock based on what the industry assures us will be popular – these methods are no longer relevant, or even possible in some cases. TK Maxx’s short order purchasing model has allowed it to continue to grow even in these unprecedented times, and the benefits of this agile technique are clear as we move forward into an uncertain future.

Fortunately, it’s not only industry giants that can take advantage of this innovation – with wholesale fashion marketplaces like TradeGala, retailers of all sizes can purchase short order fashion from international brands in just a few clicks. From purchase to store within less than a week in most cases, independent retailers can adapt to their customers’ needs and update their stock without the financial risk. With the best fashion, shoes, and accessories brands from around the world, TradeGala offers buyers womenswear, menswear, and childrenswear at the touch of a button. Make short order purchasing the reason for your retail business success – register for a buyer account today at TradeGala.

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Mina Melikova is the CEO of TradeGala and owner of online fashion retailer – Goddiva.

automation

Making Your Case: The Four E’s of Payment Automation

Paying suppliers by check is a practice that has endured for much longer than anyone would have imagined. For a while, it looked like COVID-19 might be the tipping point for companies to go completely electronic. After an initial push in that direction, however, many accounts payable departments still send their workers into the office to process invoices and manage the manual check process.

It’s not enough to want to get rid of paper checks. The case against them is not strong enough on its own. It has to be combined with a strong business case in favor of something else.

Even though manual processes are expensive, there are some rational arguments for relying on check payments. You don’t have to enable suppliers for electronic payments, manage banking data, or worry about ACH fraud. You can even outsource the process. While suppliers generally like the idea of electronic payments, they can also be deterred by complex enrollment processes.

People may also still be attached to the idea of check float. Even though interest rates remain at historic lows, it can provide a sense of security to see money in bank accounts for longer. Some businesses even have tenured employees who are used to older processes.

So is the check-writing process that bad?

The answer might have been different last January, with easy access to check printers. But now that accounts payable teams are sheltering in place, their processes often involve driving into the office and to other residencies to get checks signed. Add in the other check-stuffing and mailing steps, and you’ve got a significantly time-consuming task.

Despite the laborious nature of this process, many organizations have still stuck with it. At any rate, the widely-predicted wave of late payments never formed. People dug in and got things done, despite the unforeseen challenges. The added steps have now become business as usual.

While it seems absurd to add “driving paper around” to anyone’s job description, it speaks to how deeply checks are embedded in the B2B world. Companies hadn’t drawn the line at walking checks around for signatures, keeping a safe full of check stock, or renting an offsite storage space for paper files. What’s one more step?

There are plenty of reasons why it makes sense to stop writing checks, but we’ve narrowed it down to four. These “Four E’s of Going Electronic” make up a compelling business case for payment automation adoption.

Economics. What does it cost your organization to write checks? And not just the sum of material costs like ink, check stock, envelops and stamps–which generally comes out to about 75 cents per check. But also consider the cost of time and people. Industry analysts estimate it’s more like $3 to $5 per check, and it could be as high as $10 in some organizations. Remember to consider opportunity costs in your economic analysis. For example: What could your AP team spend time on instead, once extensive check processes are streamlined?

Efficiency. Even if you only write checks, you might have workflows established for different variations of payments. Perhaps they’re based on the payment amounts, signatures required, or even supporting documentation. All these manual and mechanical workflows could easily be automated, so approvers and signers can do their role in minutes, from any location.

Experience. How do suppliers want to get paid? Do they want to go to the office to handle checks? With ACH or card, suppliers get their money faster, without the threat of a check bounce looming over their heads. If you apply some technology to remittances, cash application experience can be much quicker and painless.

Ease of implementation. It’s easy to do things electronically, but your business case breaks down if you don’t have the resources to contribute towards the implementation process. Suppose you’re going to look for a solution. In that case, the last part of the business case has to be ease of deployment, versus what it would look like if you tried to automate everything yourself.

If you were going to do it yourself, you’d have to find a printing organization to cut the checks. You’d have to get IT to create a file to their specifications. You’d have to keep them supplied with check stock. Then you’d have to get your IT people to create another file for your bank for ACH payments. You’d have to run an enablement campaign to get vendors on board. You’d have to come up with a process for maintaining and storing their information and protecting it from breaches and fraud. You’d have to have IT create a file for your card provider. That’s three separate processes that you have to set up and launch and maintain.

Doing all that on your own is a major undertaking, and when you get right down to it, this is a big part of the reason that checks persist. The case against them isn’t strong enough on its own, and it’s counterbalanced by a case against automation—at least automation as we’ve known it in the past, which is much as I’ve described above–a semi-automated process where you do a ton of work to set it up, only to find yourself managing all these different file types and workflows and data just to be able to move the money electronically—and then you’re still probably doing half your payments by check. People have tried it, and it affirmed their choice to stick with checks.

Compare that to just handing it off to somebody that can automate the whole process and implement in about six weeks with just four hours of IT time. That is what is possible with today’s payment automation solutions. You also get continuous vendor enablement, fraud protection, error resolution and a payment guarantee in the bargain.

What often happens is that employees who want to get rid of checks are the ones most burdened by them. With working from home becoming the new norm, these people are more burdened than ever before. Yet they are not typically the decision-makers when it comes to choosing which projects receive funding. The most significant competition for automation is simply the simplicity of maintaining the status quo.

Perspective is everything. It’s rarely enough to point out how to disrupt the norm–you have to paint a picture for a better future. When writing a business case for payment automation, draw attention to the permanently simplified (and cheaper) workload that automated processes would bring, rather than focusing on the temporary unfamiliarity of your solution. Keeping that kind of mindset may accomplish what years of manual effort have not: eliminating business check writing once and for all.

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Derek Halpern is Senior Vice President of Sales for Nvoicepay. He has over 20 years of technology sales and leadership experience, including 16 years in the fintech and payments space.

mustard

The European Prepared Mustard Market Flattened after Two Years Of Robust Growth

IndexBox has just published a new report: ‘EU – Prepared Mustard – Market Analysis, Forecast, Size, Trends And Insights’. Here is a summary of the report’s key findings.

After three years of growth, the EU prepared mustard market decreased by -3.9% to $2.9B in 2019. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price). In general, consumption, however, continues to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2018 with an increase of 10% year-to-year. As a result, consumption attained a peak level of $3B and then shrank slightly in the following year.

Consumption by Country

The countries with the highest volumes of prepared mustard consumption in 2019 were the UK (221K tonnes), Germany (202K tonnes), and Italy (190K tonnes), together comprising 44% of total consumption. These countries were followed by France, Spain, Poland, Ireland, the Netherlands, Romania, Belgium, the Czech Republic, and Sweden, which together accounted for a further 43%.

From 2013 to 2019, the most notable rate of growth in terms of prepared mustard consumption, amongst the key consuming countries, was attained by Romania, while prepared mustard consumption for the other leaders experienced more modest paces of growth.

In value terms, the largest prepared mustard markets in the European Union were Germany ($532M), the UK ($437M), and France ($421M), together accounting for 48% of the total market. These countries were followed by Spain, Poland, Belgium, Ireland, the Netherlands, Romania, Sweden, the Czech Republic, and Italy, which together accounted for a further 36%.

In 2019, the highest levels of prepared mustard per capita consumption were registered in Ireland (11 kg per person), followed by Belgium (4 kg per person), the UK (3.27 kg per person) and the Czech Republic (3.25 kg per person), while the world average per capita consumption of prepared mustard was estimated at 2.71 kg per person.

Production in the EU

In 2019, prepared mustard production in the European Union reached 1.5M tonnes, increasing by 1.9% against the previous year. The total output volume increased at an average annual rate of +3.3% from 2013 to 2019; the trend pattern remained consistent, with only minor fluctuations being observed in certain years.

Production by Country

The countries with the highest volumes of prepared mustard production in 2019 were Italy (335K tonnes), Germany (325K tonnes), and Poland (154K tonnes), together accounting for 53% of total production. Belgium, Spain, the Netherlands, and France lagged somewhat behind, together accounting for a further 36%.

From 2013 to 2019, the most notable rate of growth in terms of prepared mustard production, amongst the key producing countries, was attained by the Netherlands, while prepared mustard production for the other leaders experienced more modest paces of growth.

Imports in the EU

In 2019, overseas purchases of prepared mustard increased by 3.8% to 1.6M tonnes, rising for the fourth year in a row after two years of decline. The total import volume increased at an average annual rate of +3.3% over the period from 2013 to 2019. In value terms, prepared mustard imports amounted to $3.9B (IndexBox estimates) in 2019.

Imports by Country

In 2019, the UK (374K tonnes), distantly followed by France (202K tonnes), Germany (174K tonnes), and the Netherlands (159K tonnes) represented the major importers of prepared mustard, together committing 55% of total imports. The following importers – Italy (73K tonnes), Spain (73K tonnes), Belgium (72K tonnes), Poland (64K tonnes), Sweden (63K tonnes), Ireland (58K tonnes), Romania (44K tonnes), and the Czech Republic (40K tonnes) – together made up 30% of total imports.

From 2013 to 2019, the biggest increases were in Romania, while purchases for the other leaders experienced more modest paces of growth.

In value terms, the largest prepared mustard importing markets in the European Union were the UK ($738M), France ($474M), and Germany ($455M), with a combined 42% share of total imports. These countries were followed by the Netherlands, Belgium, Poland, Spain, Sweden, Italy, Ireland, Romania, and the Czech Republic, which together accounted for a further 40%.

Import Prices by Country

The prepared mustard import price in the European Union stood at $2,394 per tonne in 2019, declining by -2.7% against the previous year. The pace of growth was the most pronounced in 2014 an increase of 7.4% against the previous year. As a result, import price reached the peak level of $2,673 per tonne. From 2015 to 2019, the growth in terms of import prices remained at a lower figure.

Average prices varied somewhat amongst the major importing countries. In 2019, major importing countries recorded the following prices: in Belgium ($2,881 per tonne) and Poland ($2,750 per tonne), while the UK ($1,974 per tonne) and Romania ($1,981 per tonne) were amongst the lowest.

From 2013 to 2019, the most notable rate of growth in terms of prices was attained by Ireland, while the other leaders experienced mixed trends in the import price figures.

Source: IndexBox AI Platform

supplier

Why is the Supplier Experience Important in Payment Automation?

It’s a difficult time to be a supplier. As companies conserve cash amid difficult economic conditions, suppliers are often the ones who feel the financial strain. Payment terms get extended. Buyers seek to renegotiate contracts to optimize their processes and adapt to new solutions. But then their suppliers are left out of the discussion until they’re presented with their marching orders.

Even though a company’s first responsibility is to its bottom line, it cannot afford to forget that suppliers are ultimately responsible for their ability to deliver revenue. It’s especially important right now that companies take care of their suppliers for the supplier’s benefit as well as their own.

Nightmare Scenarios

If suppliers don’t get paid in a way that works well in their processes and systems, it causes many nightmares for their accounts receivable team. Those nightmares can spread throughout the organization, causing stress and frustration. That frustration sometimes manifests as a conflict between buyers and suppliers. In my prior finance roles, I saw my fair share of suppliers who went to great lengths to make their dissatisfaction known, from verbally assaulting my unsuspecting colleagues to threatening lawsuits.

When suppliers go to these lengths, it’s because they’re desperate for action on the buyer’s part. In today’s environment, their distress is twofold. Payment amounts that seem negligible to buyers make a significant difference to suppliers. The constant flow of payments from AP to AR teams has slowed as companies conserve their funds as long as possible. The ebb and flow of this process has always been present—it’s how many companies do business. But this year, suppliers are feeling the strain more than usual.

Increased Collection Pressure

In 2001 and during the Great Recession, we saw that when the economy struggles, finance departments add aggressive collections specialists to their accounts receivable teams to collect overdue money from their customers, relationships aside.

In my experience, AP people are helpful, conscientious, and tough. They have to be, as the liaison between their company and its suppliers. Right now, they’re on the front lines, battling to conserve cash. If past downturns are any indication, they’re currently bogged down with calls, and morale is dipping as the number of irate callers spikes. What’s worse, that stress and emotional exhaustion can cause high turnover rates, which in turn leaves companies in a constant state of training new-hires—a drain on already-limited resources.

From a strategic standpoint, if you’re not getting payments to suppliers in a way that’s conducive to their operations, they could go out of business. They might also choose to stop working with your company altogether. To them, not all customers are ideal, and as more of them abuse the “customer is always right” notion, suppliers have to withhold the benefit of the doubt and act in self-preservation.

I’ve experienced both positive and negative aspects of the financial battle. On the one hand, I’ve negotiated with large retailers who ground businesses down to the thinnest margins. Smaller companies who rely on their enterprise customers to stay afloat are often forced to accommodate them, knowing that they are expendable and replaceable. Conversely, I’ve worked with a global manufacturer that valued its supplier relationships and would only offer early payment discounts and supply chain financing if they knew it would benefit the supplier. This company holds stress-free, decades-long relationships.

When suppliers don’t get paid on time, they may decide to deprioritize the offending customers. By becoming a nuisance in their process, your supply chain could feel the impact. Ultimately, this translates to your inability to generate revenue.

Buyers Care

Fortunately, more companies seem to value their supplier relationships than not. I recently participated in a third-party study to understand what potential payment automation buyers value the most about adopting such a solution. Supplier experience took the third spot after efficiency and fraud protection.

Supplier experience appears in our buyer persona research too. When I meet with customers, they want to ensure that we treat their suppliers well. It’s not only part of the company culture they wish to instill in all of their relationships, but they also worry about the impact on their AP team and the supply chain if something goes wrong. They understand any economic impact on their suppliers ultimately translates to higher prices.

Supplier Experience Now

Supplier experience has always been a crucial part of our value proposition as a payment automation solution, and why we continue to focus on building upon the improvements we have already implemented.

We have a dedicated team that supports suppliers on behalf of each customer. Because many customers share the same suppliers, we act as the main point of contact for all of them, which reduces the number of touchpoints a supplier must make to resolve payment issues or update contact or financial information. At the same time, we’re flexible. Some of our customers have invested deeply in their supplier relationships, and they still prefer to be involved in communications. In those cases, we don’t have to be the single point of contact. Suppliers can contact us or their customer’s AP team—whichever suits them.

For suppliers with hundreds of customers in our network—which is common in verticals such as automotive, construction, and technology—we even offer consolidated payments. For example, we combine all their incoming payments into one deposit and supply a data-rich file for easy reconciliation, right down to the customer and invoice level. This data is delivered either through our payment portal or by email.

Creating a Satisfying Experience

At Nvoicepay, we’re always looking at new methods for supporting customers and suppliers alike. It’s our goal to offer better payment products, faster payments, and more real-time data. Our most valuable report cards take supplier opinions into account, and we are proud to consistently receive satisfaction ratings above 98% from the suppliers who interact with us.

Buyers have immense power over suppliers, and sometimes they press that advantage hard. As a payment automation provider, we advocate for and support our customers—the buyers. However, we have found that supplier advocacy results in measurable success for all parties involved.

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Josh Cyphers is the President of Nvoicepay, a FLEETCOR Company. For the past 20 years, Josh has managed successful growth for a variety of companies, from start-ups to Fortune 100 companies. Prior to Nvoicepay, Josh held leadership roles at Microsoft, Nike, Fiserv, and several growth-stage technology companies. Josh is a lapsed CPA, and has a BS in Economics from Eastern Oregon University.

contracts

Don’t Get Caught Off Guard by Expired Contracts

Contracts are key to mitigate risk, secure discounts, and acquire services. Your procurement teams work hard to negotiate contracts that enforce the most beneficial terms for your company, and your AP team takes careful measures to ensure each invoice is paid on time. However, one section of the contract that’s often overlooked by finance teams is the expiration date. Surely your supplier will let you know when it’s time to renegotiate, and someone’s tracking it somewhere, right?

The truth is, in many organizations, the expiration date of a contract is often completely unknown. An expired contract can have serious ramifications to your business functions and could cost you a lot if you’re unaware of its pending arrival. Below are a few scenarios that can happen if you’re caught off guard by expired contracts.

Where are our contractors?

If you fall out of contract with your contractors, the first thing you might notice is that they simply don’t show up. This may not be a huge issue on temporary projects such as landscaping, but if you’re relying on them for long-term IT support, this could be a big issue: A few weeks of contract renegotiations can slow down your business significantly. Staying ahead of contract expirations allows you to renegotiate terms before they expire, to ensure there aren’t any gaps or delays in your projects.

Hmm, this seems more expensive than usual

If your supplier contracts expire, they’re no longer obligated to honor the price you negotiated. They can suddenly begin to charge their market rate, which is likely substantially higher than the contracted rate. This would be an unwelcome surprise for any finance team, especially if it’s after you’ve already purchased the goods (and perhaps even used them as components within your product). After a contract is expired, you lose all your leverage to find an alternate supplier, and the cost of your goods can rise exponentially. Avoid this supply chain nightmare by knowing in advance if you need to renegotiate your prices.

I can’t afford my new subscription price, but can I afford not to have it?

Contracts often include a clause that limits cost increases upon renewal, typically around 3-5% or covers the cost of inflation. However, if the contract expires, this clause will no longer be honored. Let’s say your business is using an ERP or CRM software on a six-year contract. During that timeframe, the software company raised its annual fee from $400K to $3.5M. Unfortunately for your company, you didn’t renegotiate the contract before expiration, and you now have zero leverage to negotiate a better price. Even worse, the cost of switching may be equally high, so it doesn’t make sense to look for alternative software. Your company has no choice but to pony up the money in order to keep your business functioning on all cylinders.

The above scenarios would be tricky for any business to avoid. With so many contracts with so many different suppliers, it can seem impossible to be aware of each upcoming expiration date. However, AppZen’s Contract Audit notifies you of all of your upcoming expirations (and coupled with AP Audit, you can also be confident that your contract terms are reflected on each invoice too). Thanks to AppZen, you’ll be notified with enough time required to make a decision on alternative suppliers, saving you costly mistakes, and keeping your business and supply chain running at 100% efficiency.

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David Wishinsky is a Senior Product Marketing Manager at AppZen.

supplier

How Do Electronic Payment Solutions Fulfill Supplier Needs?

Paying all your suppliers electronically makes sense—in theory. At a high level, doing so is a simple enough task—you enable your AP team to make all their payments through electronic means. Then you have yourself a cost-generating solution. But to your AP team—the people at ground level—there’s much more behind the process than sending payments. They also must track sent payments, follow up on uncashed checks, handle fraudulent cases, and work with suppliers who are missing payments for one reason or another.

Unfortunately, most electronic payment businesses that tout themselves as solutions only find value at the high-level glance, which is a detriment to your team. For example, while banks and card networks move money electronically, they don’t provide much supplier support, which is often needed to take payments across the finish line. In the end, that task often falls to your employees once again.

AP also tends to use the oldest equipment of any team in most companies. They’re still running error-prone manual processes, with stacks of checks and invoices on their desks in need of circulation on foot. Process exceptions and one-off requests torment them. Suppliers are calling and emailing, looking for payment. At the same time, AP handles other issues like lost or erroneous invoices, payments landing in the wrong accounts, or which otherwise need attention.

The whole operation is like a house of cards. Even if you know you need to change, nobody wants to touch a single card for fear that the entire thing will fall apart. Asking them to enable suppliers for electronic payments is extra work, and not usually in anybody’s job description. It’s hard enough to get the regular work done; heaven forbid somebody on the team gets ill, goes out on leave, or quits. They’re really under a lot of pressure.

A new generation of payment service providers automates payments in the cloud and offloads much of the support work that AP usually handles instead of focusing on higher-value initiatives. When your process was held together with duct tape and string, it can be hard to imagine confidently handing the work to a service provider. To understand what’s possible today, let’s look at what payment support services look like at scale here at Nvoicepay.

Supplier Enablement

When our customers sign on with Nvoicepay, our implementation team goes right to work with their AP staff to get supplier lists and instructions for reaching out to them. If any suppliers require special arrangements due to prior agreements with them, we take those into account.

Our customers often pay many of the same suppliers. Because Nvoicepay maintains an extensive network of suppliers—about 800,000 of them—many suppliers are instantly payable without additional work. When suppliers aren’t already in our system, we campaign to get them electronically payable in a fashion that meets their individual needs. We prioritize Mastercard due to the ease of payment for all parties involved. As time goes on, the Nvoicepay team maintains supplier data, keeping up with changes on behalf of our customers.

Suppliers that still need to receive physical checks can do so. Even if they do, the process remains electronic on the AP side so that customers can issue check payments in the same batch as other electronic payments. Supplier questions are routed to our in-house support team, alleviating another large responsibility from AP.

Training and Implementation

While suppliers are being enabled, our technical support team trains the accounts payable group that will be using the software in a succinct, one-hour meeting. We know that AP turnover can be high, so we offer additional training by request to ensure that the customer’s entire team remains up-to-speed.

Our technical support team also works with the implementation team to ensure that the initial configuration caters to each company’s specific needs.

Making Payments

In the life of a manual process, AP teams need to fill out bank forms for each ACH batch or access their bank website to make wire payments. Payment automation consolidates those tasks—and more—into a single file from their ERP, which contains all the invoices the company wants to be paid. Nvoicepay disperses those payments based on each suppliers’ preferred payment type, set up in the enablement step, and continuously maintained.

On the back end, customers have total visibility into how those suppliers are getting paid, when checks cleared, and when Mastercard payments were issued. They can also track unprocessed Mastercard payments.

Payment Modification

Nvoicepay guarantees every payment, and as such, the phone number listed on the remittances is ours. If there’s an issue with a payment, your suppliers call our payment support team directly, and we work through any questions they may have. Our software also includes a form that alerts our Payment Modification team of the need to resolve errors, refunds, reissues, or stop-payments. We turn those requests around quickly, as quickly as a customer could call their bank and do it themselves. We take as good care of our customers’ suppliers as they would. No matter where an error occurs, we work to resolve it and to keep our customers informed throughout the process.

If a supplier reaches out to their customer directly, the customers also have visibility into our system. They can handle those one-off events without trouble.

Card Retention

Many AP groups have dealt with card programs that promised significant rebates but didn’t deliver. Making as many payments as you can by card is what helps you maximize rebates. To aid this, another faction of our operations team—the supplier services group—reaches out to suppliers who haven’t processed their cards after a set time. The team works with suppliers to answer any questions they have about the payment, and to support the processing of as many cards as possible.

Within the supplier services team is a retention group, which assists suppliers who may want to stop accepting card payment. That’s the most beneficial payment method due to the rebate. Still, there can be various issues on the supplier end, such as card fees, or challenges with remittance or reconciliation. The retention group learns what the supplier objections are to card. If we can’t work through them, we enable a different payment type.

While most suppliers can process virtual cards through their terminal once they receive the remittance, others have set requirements or separate terminals that require specialized processes. In those cases, our group called AP Concierge will either call the supplier directly to make payments or pay through their terminal. Our internal goal is to have less than three percent of unprocessed cards monthly. After 60 days, unprocessed payments must be refunded to the customer, which creates unnecessary work.

Embracing True Support

Why don’t companies pay all of their suppliers electronically? Because it takes a village to do all the work around making payments! Nvoicepay’s dedicated teams support every piece of the payment process because we know that’s what it takes. It’s a rare AP team that can handle these pieces on top of getting payments out the door, let alone have special teams devoted to each area.

AP teams have been laboring under manual work and partially automated processes for so long; it’s hard to imagine someone taking all that work off their plate. But that’s precisely what we do.

And sometimes, it’s hard to imagine what AP jobs will look like when the payment process becomes automated. We don’t often see companies cut staff when they bring in Nvoicepay. Instead, we have found that companies reduce their staff growth rate, and that existing staff moves onto higher-value work.

_______________________________________________________________________

Angela Anastasakis is the SVP of Operations and Customer Success for Nvoicepay, a FLEETCOR company. She has more than 30 years of leadership experience in operations and product support. At Nvoicepay, Angela has been instrumental in leading Operations through rapid growth, while maintaining our 98% support satisfaction rating through outstanding service.

risk

How to Get a Handle on Risk in Uncertain Times: 10 Important Considerations

Risk: It’s the operative word on everyone’s mind right now. Whether it’s COVID-19 or oil prices, supply chain impacts or financial market concerns, understanding the impact of macro and micro-events, assessing their impact and putting in place the right action plans to mitigate that risk as best as possible is the priority task at hand.

Here we’ll examine ten steps to consider to ensure you’re being as thoughtful and rigorous as possible in your response to risk.

1. Take Care of Your PeopleHopefully, this has already been priority number one for your business after the past few weeks. How do we safeguard our people? How do we handle work from home – voluntary versus mandatory? What other flexible resourcing options do we provide – from sick leave to absenteeism considerations? What are the IT implications and subsequent human resource and capacity management concerns we need to consider and fully factor in? Err on the side of caution. Better to be safe than sorry.

2. Analyze Internal Risks – Before you can do that, you need to galvanize the right teams to be able to understand, assess and action against those risks. It’s critical to build the right cross-functional teams to be able to look at, and understand, the relevant issues to consider. This will involve finance, R&D (depending on your business) and marketing and sales. It will also involve teams like quality and sustainability leaders, as there will be implications and follow on ramifications despite your very best efforts.

3. Conduct Scenario Analyses – For critical categories, it’s important to get a handle on what alternative demand/supply options are. What are the pessimistic versus expected versus optimistic cases depending on what happens with the current situation, both in terms of the pandemic but also in terms of current and expected economic conditions? As part of any such assessment, you’ll need to score, assign probabilities and weights and adjust your thinking and actions accordingly.

4. Talk to Customers –This doesn’t tend to be the first thing people think about when it comes to procurement, but understanding the demand side implications for your business will be essential. How will demand be disrupted? Will there be specific products in your portfolio that will be more directly or severely impacted? Will this result in demand cutbacks or surges? Where will you source supply from? Can you cut back supply needs for others? How will buying patterns change – will there be channel shifts from offline to online? How does that play out in terms of critical suppliers and critical buys and requirements in the near to medium terms? Maintaining a dialogue with customers to understand their needs and issues and where all of this plays through for your team is essential.

5. Develop Plans for Strategic Categories –You’ll need to revisit your plans and the related risks around your most critical categories during a time of crisis. Make sure that these plans have been reviewed, the pressure points tested, the risk points analyzed and alternative plans considered. This could mean enhancing inventory levels (and rethinking inventory buffers based on the scenario planning we talked about earlier), assessing implications for delivery performance, gaining a view of multi-tiered supplier performance, increased inbound category visibility and more.

6. Examine Logistics Implications – By the same token, businesses must assess the logistics implications both inbound and outbound, either to make products or to ensure delivery. This has cost and timeline implications. All modes of transportation can be seen to be impacted, not least of which is shipping impacts – especially to and from China, but elsewhere, as well – whether these impacts are halts on movements, ramp downs, or the subsequently phased ramp back up. Or bypassing some of these options and going to airfreight which presents another level of cost to timeline tradeoffs.

7. Assess Liquidity – This will be critical and will call for a stronger partnership and alliance with finance. Looking at cash positions, assessing payables, and of course extending that into receivables, etc. will be essential. Add to this, talk of tightening credit markets and this makes it all the more important. Cash as always will be king if we need to endure near term instabilities, revenue disruptions, supply chain impacts, sourcing problems, and more

8. Assess Supplier Health – Part and parcel to all of this is assessing supplier health and evaluating who will be the most impacted. A clear view of your supplier segments – strategic versus mid-tier versus everyone else – is essential so you can focus your time and analysis accordingly.

For the most strategic suppliers, it’s critical to have a multi-tiered view of their supply base and related dependencies so you can adequately assess their performance and supply chain bottlenecks. This will involve structured risk analyses – looking across multiple variables beyond financials, to operational performance, to industry performance factors, to geographic and locational concerns and more. You’ll also need to identify alternate supply sources to shift production as and where needed, and as quickly as possible. Not all of this can be done at a moment’s notice. Some of it should have been done as part of a prior risk assessment exercise.

9. Think Ahead – Businesses can’t afford to simply think about today. Consider what the next three to six months look like. This is where scenario planning comes into play. It is critical to assess not only how you can react now but also how to prepare for eventualities later, when things are either fully back to normal or in some altered state based on longer-lasting ramifications from the events of today.

10. Work With Facts and Manage Emotion – Fundamentally, the most important thing you can do is to continuously monitor changes in a structured fashion. Have a programmed information collection and analysis mechanism. If we accept that the crisis is still unfolding and that the true impacts from a supply chain disruption perspective may not reveal themselves for months, we need to take tangible steps.  This can be done by establishing a process to monitor other regions outside the infected areas that could be impacted. Are ports outside the infected areas being impacted through disruption or through new regulations to protect against transmission of the virus?  Are suppliers struggling financially without access to the Chinese markets, jeopardizing their viability? Data will be important but data converted to relevant insight for your specific supply chain situation will be essential.

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Omer Abdullah is Co-founder and Managing Director of The Smart Cube and is responsible for managing the company’s Americas business.Omer has more than 25 years of management consulting, global corporate and industry experience across North America, Europe and Asia.

Prior roles include A.T. Kearney (North America), Warner Lambert (USA) and The Perrier Group (Asia-Pacific). Omer has an MBA from the University of Michigan at Ann Arbor, USA and a BBA from the University of East Asia.

personal protective equipment

Personal Protective Equipment for Infection Control Market to Hit USD 17.1 Billion by 2026

The global Personal Protective Equipment for Infection Control Market should increase from USD 10 billion in 2019 to USD 17.1 billion in 2026.

The massive outbreak of COVID-19 has produced a significant rise in the revenue scale of global personal protective equipment for infection control market. Global Market Insights, Inc., predicts the personal protective equipment for infection control industry to garner appreciable gains over 2020-2026 while depicting a CAGR of -19.3 percent through 2026, perhaps due to the expanding number of surgical procedures and rising awareness about personal safety for infectious diseases.

The lucrative growth map of personal protective equipment for infection control market is evident from the surging importance of safety at vivid workplaces lined with stringent regulatory reforms pertaining to the safety standards. Numerous regulatory authorities have addressed safety standards during operations in manufacturing industries and various service organizations like hospitals and research laboratories.

Moreover, standard operating protocol developed for security and safety against infections at the workplace would favor the business growth over the due course of time. Although the PPE for infection control is unveiling new trends across the globe, the complexity and dearth of time in the production of these might hamper the industry growth to some extent.

Categorized into products, types, and end-use industries, the personal protective equipment for infection control market across the hand and arm product segment is poised to perform exceptionally well in the ensuing years. For the record, hand and arm personal protective equipment market acquired a business share of $4.2 million in 2019. The momentous growth of this segment can aptly be ascribed to the increased risk of infection worldwide. Besides, skin disorder, given the direct contact to toxic pathogens and radioactive materials would propel the industry growth in the years ahead.

Considering the type bifurcation, the disposable PPE market held a considerable revenue share of 74 percent in 2019 and is touted to witness appreciable growth during the mentioned timeframe owing to its ability to reduce risk of infection as it is disposed of after use.

Elaborating further, personal protective equipment for infection control market from the research and diagnostic laboratories segment is set to accrue phenomenal proceeds in 2020, fundamentally due to the growing R&D activities in order to bring forth advanced solutions for diagnosis and treatment. In addition to this, elevating COVID-19 cases worldwide has enunciated the massive demand for PPE in diagnostic laboratories for effective security and functioning.

Personal Protective Equipment for Infection Control market report provides a comprehensive landscape of the industry, accurate market estimates and forecast split by product, application, technology, region and end-use. All quantitative information is covered on a regional as well as country basis. The report provides valuable strategic insights on the Personal Protective Equipment for Infection Control market, analyzing in detail industry impact forces including growth drivers, pitfalls, and regulation evolution. The report also includes a detailed outlook on the Personal Protective Equipment for Infection Control market competitive environment, diving into the industry position of each major company along with the strategic landscape.

Personal Protective Equipment for Infection Control market report is an all-inclusive document, compiled and designed to provide best-in-class research, insightful analysis and accurate quantitative data. The coverage of this research is the most extensive when compared to other similar studies available on Personal Protective Equipment for Infection Control market. The industry ecosystem information presented in this report is next-to-none and aims to address all stakeholders of the industry, irrespective of their size and business function. Details of segmentation and cross reporting structure, wherever feasible, makes this Personal Protective Equipment for Infection Control market research one of its kind to offer the most in-depth, readily available data.

Speaking of the regional demographics, the United States is poised to emerge as one of the most remunerative growth regions for industry given the current coronavirus outbreak. It has been reported that the country captured an overall business share of more than 90 percent of the North America PPR for infection control market in 2019.

This growth is ascribed to the expanding development activities paired with rising healthcare spending. It is imperative to mention that, the ongoing disease spread has urged myriad companies to undertake development activities with an aim to offer effective and accurate solutions to abate the infection transmission across the country while boosting its stance in the global market.

Although the rising patient pool has produced a shortage of PPE, various organizations like 3M Company, Honeywell, and multiple others, have laid their focus on establishing M&As to manage the increasing demand for these. Thus, these strategic initiatives would enhance the industry outlook over the forecast period.

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Source: Global Market Insights, Inc.