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How can you overcome supply chain disruption?


August 1, 2022

If there’s one key lesson businesses have learned over the past few years, it is that supply chains need to be much more resilient. Supply network managers were already operating in an incredibly challenging environment before the war in Ukraine. Now the scale of challenge is greater than ever. Vital commodities such as crude oil, natural gas, cereals, nickel, palladium and more have been affected. Logistics have been disrupted and energy prices have skyrocketed. Longer term, the impacts will continue to be severe with inflation projected to stay high through 2022. Add pervasive risk and uncertainty to the mix, and it’s clear supply chain planning has never been more complex.

For companies in growth markets, there are some particular challenges. Supply chain frictions are forcing some smaller companies and developing countries out of trading networks. Supply disruptions are driving rising debt and higher inflation, with a number of developing economies forecast to have significant output losses into the medium term. And a number of emerging nations face possible defaults on debt payments as borrowing costs continue to rise.

It’s impossible to eliminate disruption. But it is possible to increase a network’s ability to absorb shocks and unexpected developments without compromising productivity, efficiency and sustainability. Indeed, constrained energy supply in recent months means some companies may accelerate their sustainability agendas by turning to renewable energy to reduce future dependency on oil and natural gas.

There are some priority steps that supply chain managers in Growth Markets can and should take to embed resiliency and manage supply network constraints.

A smarter way to manage supply chain constraints

For years, supply chain managers focused mainly on cost and service levels. This means most supply chains have prioritised optimisation, with resiliency taking a backseat. Now, however, business and economic volatility are forcing companies to measure their supply chain’s ability to react to unplanned events.

The answer to greater supply chain resiliency doesn’t lie in simply holding more inventory and building redundant capacity. Both increase costs. Instead, there’s a cost-effective way to create a more resilient supply chain with “intelligent visibility” – a must-have capability combining structural and dynamic visibility, supported by analytics, AI and human ingenuity.

With many of their Tier 1 and Tier 2 suppliers continuing to be impacted by the war in Ukraine, particularly in sectors like foodstuffs and semiconductors, organisations in growth markets must prioritise this end-to-end visibility across their supply networks. The ones that do so will be the most likely to maintain revenues, profits, and share price performance in uncertain times.

This blog was originally published on July 28, 2022, and was updated with new information on August 1, 2022.


Vivek Luthra

Managing Director – Strategy & Consulting, Supply Chain & Operations, Growth Markets Lead