Paris Olympics 2024: A Test of Supply Chain Resilience and Economic Impact
Sweat. Tears. Glory.
The Paris Olympics 2024 have been nothing short of phenomenal, with nations showcasing their finest sporting talents on the world’s stage.
The Games culminated in a glorious closing ceremony, providing a fitting wrap-up to what was over two weeks of spectacular competition.
While the United States and China were locked in a tight race throughout the Olympics, the U.S. made it to the top of the charts, followed by China, Japan, Australia, and France. The U.S. tied with China atop the gold-medal leaderboard with 40 medals each.
A grand stage for athletic prowess
A sporting event of this magnitude, with 10,500 athletes participating across 32 sports in 329 events over just 16 days, can have undeniable effects on global supply chains.
Given the sheer scale of the Olympic Games, will the economic benefits outweigh the investments for France and the International Olympic Committee (IOC)? How can businesses cope with the strain on supply chain networks?
Let’s find out.
What does it cost to host the most popular sporting event in the world?
Hosting the Olympic Games is no doubt a privilege. Having said that, the lesser-mentioned reality is that the costs of the Olympics are said to crush host cities.
The summer event in particular, which draws massive crowds and the world’s best athletes once every four years, is an extremely costly undertaking for the host city.
Here’s the backstory:
- The last summer Olympics, Tokyo 2020—overshot the budget.
- Prior to that, in Rio 2016—the summer Olympic Games were said to be a financial disaster.
- Owing to the skyrocketing costs of hosting the Olympic Games—Paris faced little competition for its 2024 bid.
This time around, Paris averted the financial disasters of the past with what might be the least costly Olympics in decades.
Initially, the sporting event was budgeted at approximately $8 billion. Since then, reports claim that the budget has increased by $0.7 billion, with the costs divided between operating expenses and new infrastructure.
A combination of public and private investments drove the financial engine behind the Paris Olympics.
96% of the budget for the Paris Olympic and Paralympic Games came from the private sector, namely the IOC, partner companies, the Games ticket office, and licensing.
How did the Paris Olympics cut down on costs?
Existing infrastructure.
- They constrained costs by minimising new construction, retrofitting existing venues, and setting up temporary spaces that showcase their landmarks.
- Another advantage for France is that the country already has plenty of sports venues to its credit.
Further, to offset the expenditures on the Olympic Games, Paris will bank on various revenue streams such as sponsorships, ticket sales, broadcasting rights, and merchandising.
Paris Olympics to bring a $12 billion economic boost
The 2024 Paris Olympics will reportedly have an economic impact of $12.2 billion, providing a massive boost to the local economy and resulting in growth for both domestic and international businesses.
The key drivers of this economic impact are tourism, construction, and the organisation of the Games themselves.
Moreover, with the anticipated spike in demand during events like the Paris Olympics, businesses should adopt proactive cash flow management strategies and optimise their working capital by closely monitoring accounts receivable and payable. This will help them avoid liquidity issues and ensure they have the sufficient capital needed to make the most of the heightened economic activity.
What does this mean for global supply chains?
Owing to the influx of people and goods into France, the congestion at ports and airports and even on the roads has been causing disruptions in global supply chains.
The biggest impact that the Olympic and Paralympic Games have is on the sports supply chains.
As per a report by S&P Global:
- In the past, the Olympic years have led to an 11% average spike in sports-related imports.
- However, there was an 11.3% year-over-year decline in US and EU imports in Q1 of 2024.
The unexpected decline in 2024 imports could complicate demand forecasting. Businesses will need to rethink their financial planning to avoid overstocking and ensure liquidity.
In situations like these, businesses should look to adopt more conservative procurement strategies to mitigate the risks of excess inventory.
Companies can diversify their supplier base or increase local sourcing and leverage the benefits of flexible supply chain financing solutions like a cutting-edge pre-invoice financing platform to manage costs effectively.
Logistical challenges and demand spikes are inevitable
Both the Olympic and Paralympic Games will have prolonged impacts on logistics and infrastructure.
Besides the complexity of organising such a massive gathering, the event is said to boost demand for various goods and services, leading to increased production and supply chain activities.
Other than sporting goods, construction materials, food and beverages, and hospitality services will experience a surge in demand during this time.
The rising need for agility and adaptability in supply chain networks
To ensure supply chain efficiency during high-demand periods, businesses in Paris and globally are:
- Redesigning delivery routes and ensuring close monitoring of activities.
- Exploring the benefits of need-based financing solutions to meet urgent credit gaps.
For instance, the industry giant FedEx has developed a vital strategy to manage congestion and continue delighting customers with exceptional services during the Paris 2024 Olympics and Paralympics.
- They have set up urban microhubs to support the smooth flow of parcels.
- In addition, they have added cargo bikes to their fleet for last-mile deliveries.
Surviving the test of supply chains with working capital financing solutions
The Olympics—a multi-billion-dollar affair—are bound to propel the economy of the host country, increase demand for goods and services, and subsequently mount up the working capital strain as businesses seek to finance higher inventory levels.
Against this backdrop, the use of predictive analytics can help anticipate demand and optimise inventory management. Additionally, tech-enabled working capital financing solutions allow businesses to unlock timely and affordable capital and manage their cash flow more effectively.
At CredAble, we are helping businesses double down on growth and tap into the power of their receivables with solutions like Sales Invoice Discounting, which allows them to convert funds locked up in invoices and get immediate access to working capital.
We’re backing businesses to meet every business opportunity with confidence with our advanced suite of diverse working capital financing solutions.
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