Global political unrest is the main factor causing current supply chain issues

According to a 2019 report published by the Journal of International Logistics and Trade, political unrest are among the leading causes of supply chain disruptions.

A SAP survey reported that 58% of US business leaders believe supply chain problems primarily stem due to global political unrest.

The main culprit behind the current supply chain issues worldwide

Global political unrest is indeed the main factor responsible for the current supply chain issues. Business leaders rated global political unrest as the number one reason (58%), with the shortage of raw materials (44%) and increasing fuel plus energy costs (40%) following a close second. Only 31% said inflation is a contributing factor.

Unfortunately, commodities and supply chains all across the world have now become more politicised than ever, triggered by a variety of events, including the strained US-China relationship over imports, the China-Taiwan tensions, Brexit, and the Russian war in Ukraine.

The survey results above demonstrate the impact of this politicisation on the global supply chain, with further disruptions to supply chains expected throughout 2023. In fact, at least 50% of business leaders are now anticipating a shortage of raw materials in the US alone, and 44% estimate that public transport will also be disrupted due to a lack of skilled labour.

Business leaders have been forced to strengthen their existing supply chains through specific measures which include:

• Adopting new technologies and digital tools to overcome the current challenges and any future or unforeseen ones
• Finding more environmentally-friendly and paperless supply chain solutions
• Shifting toward ‘just in case’ supply chains from ‘just in time’ ones
• Implementing fresh contingency measures

The global political unrest simply could not leave supply chains alone, especially with the war on Ukraine which impacted gas and oil supplies, as well as food security, with a knock-on effect seen on energy. Escalating China-Taiwan tensions as well as an increasing pressure on US companies to diversify their supply chains (including semiconductor and critical minerals) away from China, have led to geopolitical fragmentation.

Why firms are moving away and should move away from ‘just in time’ supply

The SAP survey also revealed how almost 2 in 3 companies (64%) are moving to the ‘just in case’ model by increasing their inventory in storage. This means that they can meet customer demand more effectively, although it does come at an increased overheads and operational cost.

However, managing the supply chain is a perpetual balancing act. In the last decades, we have seen the ‘just in time’ approach trade resilience in exchange for lower costs and efficiency, which made the supply chain rather fragile.

In the current economic climate, cost is an even more critical factor. This is why technology can help manufacturing and supply chain firms to strike the perfect balance by enabling real-time collaboration between teams and trading partners.

HS Manager app instantly generates PDF reports and customisable inspection checklists to help you get a bird’s eye view of your supply chain processes. It’s an excellent tool for keeping costs down and efficiencies high.

For more information visit https://www.thehsmanager.co.uk/