Supply chain disruptions have wide reaching effects. When a supplier in the global production and trade network fails to deliver, it can have a cascading effect on production lines, potentially causing delays and shortages of products. As Hubs’ Supply Chain Resilience Report outlines, such disruptions are on the rise. Shortages in automotive components manufactured in Ukraine have led to Europe-wide production delays; a ransomware cyberattack on one of Toyota’s suppliers led to the automotive company temporarily shutting down production in Japan; sanctions on Russian energy resources have led to an energy shortage and skyrocketing gas prices; and there are many more examples.
However, supply chains do not necessarily have to be so fragile. Manufacturers and businesses are increasingly realizing the benefits of transitioning away from lean, just-in-time manufacturing models in favor of robust, agile, and resilient supply chain models. A resilient supply chain is one that can not only weather disruptions, but can adapt and react quickly, resulting in faster recovery times. To build resilience in the supply chain, it is necessary to consider all potential risks and reassess supply networks in the long-term. This multifaceted process requires taking a comprehensive view of the supply chain.
76.6% of companies experienced externally caused disruptions to their supply chain in 2022, with material shortages being the biggest challenge.
45.3% of companies had their supply chains impacted by the war in Ukraine.
70.1% of companies took measures in 2022 to build up supply chain resilience.
49% of respondents expressed concern about the rising tensions between China and Taiwan.
Supply chain resilience has always been a sound strategy, but the need for it has grown in recent years due to the increasing frequency and severity of disruptions. Hubs’ Supply Chain Resilience Report breaks down the most significant types of supply chain disruptions and details some of the biggest disruptions of 2022, including the wide-reaching supply chain ramifications of the war in Ukraine.
In 2020 and 2021, the COVID-19 pandemic was the primary concern for supply chains. However, in 2022, geopolitical tensions and conflicts have become a greater focus of concern. The escalating tensions between China and Taiwan pose a risk of destabilizing the region and disrupting Taiwan's semiconductor industry, the largest in the world. The ongoing conflict in Ukraine has resulted in numerous supply chain problems, including trade route blockades, economic sanctions, and raw material shortages. Other geopolitical issues, such as labor strikes and shortages, shipping congestion and costs, and trade wars have also contributed to supply chain challenges.
Natural disasters also pose a severe threat to supply chains. For instance, droughts in China and Europe in 2022 led to significant transport delays along vital water trade routes. As the frequency and severity of natural disasters increase, manufacturers will need to increasingly account for their risk. Hubs cites cybersecurity as a significant supply chain risk, particularly ransomware and data breaches. The COVID-19 pandemic also continues to be a concern due to labor shortages and continued lockdowns in China.
There are several measures and tactics businesses can and are employing in order to shore up their supply chains and build supply chain resilience. According to a Hubs survey, 63% of companies have implemented supply chain resilience measures in the past year. This is significant, but still leaves many companies without adequate resilience strategies.
Decisions made for the purpose of short-term profitability, such as relying on a single supplier for certain parts, should be reassessed in the long-term. Over-reliance on a single country for certain supplies and resources can lead to supply chain vulnerabilities, as we’ve seen in Europe in terms of reliance on Russian gas, and Taiwan, which produces over 60% of the world’s semiconductors. Diversifying supply networks is thus one of the most important steps for resilience. Over half of businesses surveyed by Hubs reported that diversification was the best way to avoid supply chain disruptions in the future.
The report also investigates other supply chain resilience strategies, including automation, reserve inventories, agile internal processes, supply chain monitoring, and strengthening client-supplier relationships. By using these tactics in combination, organizations can establish a robust supply network with fewer vulnerabilities that is equipped to mitigate the impacts of any disruptions.
We are in a time where global supply chains and trade networks are becoming increasingly complex and supply chain disruptions are becoming more common and their effects more extreme. Integrating resilience into supply chains is the only way to ensure disruptions are mitigated and that organizations can succeed over the long-term. Additionally, resilience is key to establishing production stability and meeting consumer demands, particularly for essential goods. Ultimately, it will never be possible to completely avoid disruptions. What is possible is preparing for eventual disruptions and supply chain risks with autonomy, flexibility, and visibility. In a word: resilience.
Download the full 2023 Supply Chain Resilience Report for more insights on supply chain risks and resilience.
Hubs, formerly 3D Hubs, is an online platform for custom part manufacturing, providing access to a global network of manufacturing services, including CNC machining, 3D printing, injection molding, and sheet metal fabrication.