Bracing for Stagflation: Strategies to Help Weather the Storm

Recent discussions in the financial press regarding the seemingly different positions between the Treasurer and the RBA have a worrying undercurrent. We are told inflation is not coming down soon, and many business’s sales are drying up as customers tighten their belts. Unfortunately, productivity continues to trend down, and many say we already have a per capita recession. If the current behaviour of the RBA and the federal government doesn’t change, Australia could suffer from the 1970s-style stagflation.

So, while you and I do not have any control over the RBA or Treasurer of the day, we do have control over how we prepare our businesses for the potential of this looming difficulty.

First 4 Strategies to Combat Stagflation

So what can you do during stagflationary times? Below are a few strategies you could think about using to help your business:

• Optimise your inventory management. Strong inventory management disciplines ensure you have the right inventory level for the products and components you need and low inventory for the components you don’t.
• Invest in manufacturing or warehouse automation. The recent IR law changes are making it more challenging to run your business today, as are the high comparative labour costs. Any level of automation or robotics you install will only help in this environment.
• Review your supply chain strategy. Disruption still abounds around the world’s transport and logistics, especially with shipping lanes and the challenges of the Suez and Panama Canals. Reviewing your strategy, especially concerning nearshoring and multisourcing your supply, will greatly improve your operation.
• Improving the visibility of your suppliers into your future demand will also help. Sharing a 12-month rolling forecast of your demand for components helps them prepare and improve their delivery service level to you.

For a discussion about the other 10 possible strategies, reach out for a confidential chat.

© David Ogilvie