Thematic Intelligence: Supply Chain Disruption (2024)

Thematic Intelligence: Supply Chain Disruption (2024)

Summary

A supply chain comprises the activities and processes that organizations perform to manufacture and deliver goods and services to consumers. Supply chain disruption occurs when these processes are compromised. The global supply chains organized to optimize profit and speed for over two decades were flipped upside down by the COVID-19 pandemic. Companies had to adopt a just-in-case strategy for their supply chains where hoarding inventory offered a safety net for unforeseen supply chain disruptions.

Key Highlights

• Slowing growth and increasing conflict are making companies' operating environments riskier, more complex, and costlier. To improve supply chain resilience, companies should prioritize safety and reliability over profit by relocating production closer to home, diversifying their supply chain, digitalizing their networks, and adopting a circular economy model.
• In the aftermath of the pandemic, many companies have reverted to a just-in-time strategy, as high interest rates make it more expensive for companies to carry large inventories. Recent global challenges, including the US-China trade war and the Ukraine conflict, alongside the growing impact of climate change, will force companies to rework supply chains and decouple from non-geopolitically aligned regions.
• China dominates global supply chains, from raw materials to end products. So, despite the billions of dollars in government aid directed towards reshoring supply chains, there is unlikely to be a complete decoupling of supply chains from China in the foreseeable future. That said, some nearshoring and friendshoring locations in Latin America and Southeast Asia can help companies decouple from China while keeping production costs low.

Scope

• Reworking supply chains is complex and expensive, with no quick fixes. Slowing growth and increasing conflict are making companies' operating environments riskier, more complex, and costlier. To improve supply chain resilience, companies should prioritize safety and reliability over profit by relocating production closer to home, diversifying their supply chain, digitalizing their networks, and adopting a circular economy model.

Reasons to Buy

• Understand the impact of supply chain disruptions on the global economy.
• Identify how leading companies are adapting to supply chain risks.
• Learn about the global challenges increasing the frequency of supply chain disruptions.