Navigating Supply Chains in the face of change 

In 2024, the world faces a change of leadership across many of the larger key economies. We live in a place where our goods and services are delivered from all corners of the globe, so how can we work towards mitigating the risks that come with a changing political environment and stabilise our supply chains in these uncertain times?   

Changes in the political landscape can bring uncertainty and disruption to supply chains. When tariffs are imposed during trade disputes, this can lead to increasing costs and disrupted trading patterns. There have been tensions in trade between the US and China in recent years which have led to tariffs being imposed on billions of dollars’ worth of goods, prompting companies to review and re-evaluate their supplier relationships and diversify the supply chain to mitigate the risks this brings.  

Shifts in policies that changing governments bring can introduce challenges in compliance to regulations and policies. These can mean that whole sourcing strategies, category strategies and processes need to be changed, which can mean incurring higher costs and introducing complexities into the manufacturing process.  

We are experiencing conflicts and wars across the world in these modern times. These geopolitical tensions are likely to cause increased risk through the supply chain, you only have to look at the impact of removing Russia and Belarus from the supply chain to understand how difficult this process is, how the cost soon starts to increase and how that can impact on key supplier relationships. Shipping and inventory are a key area of risk, very much a focal point for geopolitical tensions giving rise to issues as described here.  

Political instability can disrupt manufacturing, food production and lead to supply shortages which then affects the cost of raw materials leading to increasing costs throughout the supply chain. This then leaves affected companies scrambling to find alternative sources of supply or trying to alleviate the issues via different means.  

This means we need to be more cognisant of how resilient our supply chains are and build in those addition safeguards to futureproof our businesses. Diversifying supply chains, so having multiple suppliers for the same goods and services is one way to do this ensuring that the geographical risk is mitigated, and single supplier dependency is reduced. Flexible manufacturing practices allowing for adaptability and quick reconfigurations in response to changing market conditions will also build resilience into the supply chain.  

Using a real time data tool and advanced analytics will help provide an enhanced level of transparency and traceability over the supply chain again mitigating risks that occur and enabling contingency strategies to be put in place.  

Establishing and building on strong collaborative supplier relationships is critical for resilient supply chains. Working together to solve an issue or mitigate risk with clear communication channels can help to neutralise the risks and issues at pace and ensure tested, effective contingency plans are place should tension and instability start to affect the supply chain.  

By working across key suppliers and encouraging innovation and continuous improvements, businesses can stay ahead of the changing political landscape, investing in research and development to adopt alternatives to materials and processes. This will mitigate risks but also enables businesses to take advantage of the emerging opportunities in our increasingly global marketplace.  

Nikki Rowbottom - Senior Consultant - 7 Step Solutions