Notes From the Summit: Supply Chain Intelligence Insights
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November 21, 2022 - The supply chain issues we saw in 2021 and 2022 will only continue as companies feel the lingering effects of the pandemic and the unprecedented disruptions it caused. Many other disruptive developments also took place in 2022, including geopolitical unrest from the war in Ukraine, wide-scale inflation, a succession of destructive, record-breaking natural disasters, and increased cyber vulnerabilities.
Intensified Supply Chain Pressures
The impact of COVID may feel less severe now, but it will continue to have a major impact on the global supply chain, especially as lockdowns continue in parts of China. The domino effects from those lockdowns are distribution congestion and bottlenecks that often lead to security problems such as increased opportunities for theft and diversion of products. Compounding those issues today are product shortages and higher fuel costs along with labor shortages and an increase in labor strikes around the world.
We are seeing a confluence of inflation and the stress that's involved in working post-pandemic. Expectations of increased wages and better working conditions are absolutely at the forefront of many people's minds. (Read BSI’s Sustainable supply chains: a people first approach to learn more about how to embed ethical supply chains into your organization)
In addition to the labor issues, the ongoing conflict in Ukraine is contributing to the impact of global inflation and rising commodity prices, especially as energy prices have reached record highs in 2022, specifically in Europe. This conflict is creating major shortages in food, fuel, and other important goods like neon gas, which is critical for the manufacturing of semiconductors.
As a consequence of these major shortages, supply chain cyberattacks are becoming more sophisticated. We know that cybercriminals are targeting and disrupting supply chains on a much larger scale as supply chains are highly vulnerable and attacks are very impactful. Ransomware attacks are particularly effective as ransom is often paid, making it a lucrative opportunity. (Read Understanding Cyberattacks)
Combined, these risks create a negative cycle; predictable supply chain operations of the past have become less predictable with far more opportunities for disruption.
Supply Chain Risk Trends
New legislation will also continue to impact the supply chain, as 2022 brought the U.S.’s CHIPS and Science Act, which added $52 billion in grants for the domestic production of semiconductors, solar panels, and electric vehicles, along with new GDPR regulations (the toughest data privacy and security law in the world) across the EU aimed at critical infrastructure resilience and servicing a large variety of supply chains.
Additionally, the Securities and Exchange Commission’s (SEC) new ruling this year requires companies to disclose climate-related risk impacts (read Tackling Decarbonization: SEC Throws a Flag at Current Climate-Related Reporting Practices). This ruling will effectively make organizational supply chains more resilient and more sustainable. It shows that organizations that address the convergence of sustainability and human rights as two sides of the same coin will deliver a bigger impact. Sustainability is often primarily considered to be about green energy and environmental issues, but it’s also about creating an environment in which employees are safe and treated fairly.
As we head into 2023, we will face more supply chain pressures; there's no escaping that, but there’s a lot of hope as well. The myriad of different threats are certainly plentiful and can be very impactful, but they have led organizations to really dig into and understand their supply chains in a more intricate and detailed way. Taking steps to better protect your supply chain, emphasize and adjust processes to combat climate change, address forced labor practices in support of human rights, and embrace the opportunities of digital transformation will allow organizations to really thrive through 2023 and hopefully move toward a more sustainable future.
Listen to Jim Yarbrough’s full Connect Summit session Intelligence Insights & Enhancements: A Preview of the 2023 BSI Supply Chain Insights Report and watch for the full report in January 2023. Register for our webinar - BEYOND THE STORM: How organizations can transition from survive to thrive in 2023
For more BSI insights on other EHS and Digital Trust topics, visit our Experts Corner. For real time updates on top supply chain issues, register for BSI’s Connect SCREEN tool; this platform provides daily analysis on the latest and most relevant global supply chain trends.
