On the up or going down?

When the Hollywood blockbuster Jaws 2 hit the big screens in 1978, the trailer warned: ‘Just when you thought it was safe to go back in the water…’ Supply chain professionals considering the prospects for 2022, after two years of pandemic-induced uncertainty, may have a similar sense of trepidation. The big threat of Covid is finally subsiding, but the fragility of supply chains is likely to remain for the coming year at least. If the last two years can be best described as a rollercoaster journey, buckle up if you’re stepping back onboard in 2022. You could be in for quite a bumpy ride…

Are you ready to face the anticipated ups and downs of supply chain resilience in 2022?

Eric Jones, Vice President & Global Manager of Business Risk Consulting at mutual insurance firm, FM Global, sums up the key lesson for global supply chains from 2021 in four simple words: ‘Resilience is not optional’.

Reflecting on the 2021 FM Global Resilience Index, which compiles economic, supply chain and risk quality data on nearly 130 countries to evaluate resilience around the world, he states what is fast becoming glaringly obvious to business leaders: “Resilience is becoming a requirement for having a successful business.

Companies need to understand where their pinch points are within their supply chain and develop strategies to mitigate those things as much as they can.

Supply chain disruption

You don’t have to look very far for some thought-provoking facts to help focus your mind. There are plenty of hard facts to underline the true meaning of ‘supply chain disruption’ – and don’t lay the blame for everything at Covid’s door. They include various studies which found:

  • 57% of businesses suffered material shortages in 2021
  • 51.3% saw the cost of their supply chains increase
  • 34.6% of companies were impacted by transportation and logistics issues
  • A shortage of 400,000 heavy goods vehicle drivers in the EU
  • 20% of road transport driving jobs unfilled in Eurasia
  • A 1.5% increase in global inflation due to shipping
  • 22.4% of companies were impacted by a lack of manufacturing capacity
  • 17.4% of businesses suffered delays due to port congestion and 16% were affected by container shortages
  • $24 billion in goods on container ships waiting for entry outside of California ports

Of course, it’s always hard to judge anything by percentages alone but most industry experts would arguably have given similar stats if asked for their impact status assessments. Some might even have given higher numbers. In a ‘no smoke without fire’ scenario, figures like these no longer come as a surprise to anyone attached to global supply chains.

Resilience is not optional

Eric Jones, Vice President & Global Manager of Business Risk Consulting at FM Global

So, that would help to explain some more statistics from a HUBS study with insights from over 1,700 industry professionals:

  • 98% of global companies are now planning to boost the resilience of their manufacturing supply chains
  • 57% say diversification of their supply chains is the most effective way to build resilience

In its most recent report, FM Global advises business to remain aware of six primary factors contributing to the current bottlenecks in the supply chain:

  • Covid
  • Cuber risk
  • Port backlogs
  • Truck driver shortages
  • Microshop shortages
  • Extreme weather

Increased likelihood of risk and losses

Whatever the outcome in 2022, for supply chain security experts any higher level of market uncertainty, change in inventory levels, disruption caused by staff shortages, or new product sourcing locations will mean increased likelihood of risk and, potentially, losses.

Organized crime groups will be reading the same reports as the supply chain industry, and are likely to take great encouragement from the changes businesses may be looking to implement, or be forced into implementing. Most New Years are greeted with a degree of optimism and after the traumas of the past 24 months, it’s hard not to feel more upbeat about the potential trading environment this year. There is a recovery starting and there is a cause for positivity. But for those of us who make a living out of the resilience of global supply chains, we can expect even greater responsibility and scrutiny in 2022 and, surely, well beyond.

On the up or going down?
On the up or going down?
On the up or going down?
On the up or going down?
On the up or going down?
On the up or going down?
On the up or going down?
On the up or going down?
On the up or going down?
On the up or going down?
On the up or going down?
On the up or going down?
On the up or going down?
On the up or going down?