Even before the current turbulence, companies closely watched geopolitical issues when it came to moving parts and products around the world. In the PwC 25th Annual Global CEO Survey, 32% of executives cited geopolitical conflict as a top threat to growth, and 71% said it could inhibit their ability to sell products or services. Global or regional disruptions can create uncertain operating environments that result in higher costs, increased complexity and less efficiency in supply chains. Tariffs, sanctions and other measures can disrupt access to critical inputs, suppliers and markets and increase regulatory burdens. Political or military crises can affect key shipping channels and leave companies searching for alternate routes.
The latest conflict illustrates these issues at play. Ukraine and Russia are net exporters of agricultural goods such as wheat, corn and sunflower oil, and a prolonged conflict could lead to shortages and prompt importers to seek alternative suppliers. The US imports large amounts of metals, fertilizers and petroleum products from Russia, while Ukraine is a major producer of neon gas, a critical component for the semiconductor industry.
How can your company navigate these kinds of geopolitical supply chain risks? Strategic agility will be crucial. To offset further disruptions and mitigate the impact on global operations, you should be confident in your organization’s ability to monitor, measure and manage exposure to geopolitical events.
Crises can pose multiple challenges across operations and have a material effect on your bottom line.
I mentioned earlier that developing strategic agility in supply chains requires companies to monitor, measure and manage exposure to geopolitical events. Here’s how you can consider doing that.