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Global Supply Chains in a Fragmented World: Navigating New Geopolitical Realities

by Editorial Team

In an era marked by rapid geopolitical shifts and economic uncertainty, global supply chains stand at the forefront of transformation. Gone are the days of seamless global integration; today’s CEOs face a landscape where geopolitical strife is the norm, demanding unprecedented levels of agility and foresight in supply chain management.

The New Geopolitical Landscape

Since the 1990s, globalization was the tide that lifted all boats. But now, the pillars of free trade and open borders are under siege, replaced by a climate of competition and nationalistic fervor. The expansion of the BRICS bloc and increasing geopolitical tensions signal a move towards a multipolar world where regional powers and blocs exert significant influence.

Understanding the Stakes

Geopolitical disruptions, such as trade wars and regional conflicts, pose direct threats to the fluidity of global supply chains. For instance, critical incidents like the war in Ukraine and tensions in the Middle East have shown how quickly supply lines can be disrupted, impacting global markets and forcing businesses to rethink their strategies.

Building Geopolitical Resilience

Modern CEOs must view geopolitical risk through the same lens as digital transformation or climate change. This involves:

  • Developing Geopolitical Agility: Companies must be able to swiftly adapt to sudden changes in the geopolitical landscape to maintain operations and safeguard interests.
  • Strengthening Supply Chain Resilience: This means diversifying supply sources and considering nearshoring or friend-shoring to reduce dependency on volatile regions.

Proactive Versus Reactive Strategies

The difference between proactive and reactive management can determine a company’s survival in tumultuous times. Proactivity in geopolitical strategy means continuously assessing potential risks and preparing for them through strategic planning and robust operational frameworks.

Envisioning the Future

Leaders should consider various scenarios of how geopolitical relations might evolve and prepare for multiple outcomes. Scenario planning helps businesses anticipate changes and develop flexible, responsive strategies that protect against potential disruptions.

The Path Forward

As global dynamics shift, CEOs must integrate geopolitical thinking into their core strategies, moving beyond mere risk assessment to actively shaping their companies’ futures in the global marketplace. This includes investing in technologies and processes that enhance visibility across the supply chain and fortify connections with reliable partners.

Navigating the complexities of today’s global supply chain landscape requires a blend of strategic foresight, operational agility, and a deep understanding of geopolitical factors. How is your organization adapting to these challenges? Join the conversation below and share your insights on building resilience in an era of geopolitical uncertainty.

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Unleashing the Power of Procurement: A CEO’s Secret Weapon for Growth and Resilience

by Editorial Team

Procurement in the Spotlight: Driving Business Growth and Resilience in Uncertain Times

In a world marked by uncertainty and disruptions, procurement emerges as a secret weapon for CEOs. This article delves into a recent Forrester Consulting report commissioned by Ivalua, revealing how procurement is becoming a critical function for achieving growth and resilience.

In today’s complex and dynamic business environment, organizations face challenges that extend beyond conventional economic, monetary, and financial risks. They also grapple with mega threats such as inflation, recession, geopolitical risk, and supply chain disruptions, which can significantly impact their performance and survival. A recent Forrester Consulting report commissioned by Ivalua, titled “Procurement: A CEO’s Secret Weapon for Growth and Resilience in Turbulent Times,” explores how the procurement function can become more agile and help organizations adapt to market or business environment changes.

The report emphasizes the expanded mandate of procurement, which now entails value orchestration. It discusses the role of procurement in resolving disruptions for businesses and how supplier strategies have become more digitized and collaborative. The report also highlights the hindrances to procurement agility, such as a lack of leadership, data, and outdated systems.

The study found that improving procurement initiatives helps meet business objectives, allows procurement leaders to discover hidden gems and slash costs, increases operational resilience, and reduces overall business risk due to transparent communication. The report concludes with key recommendations for chief procurement officers (CPOs) and procurement teams to navigate their organizations in an uncertain environment.

Takeaways:

  1. “Redefine the procurement function so that it is fit for purpose. Invest in modern technology and train a new generation of strategic buyers.”
  2. “Take a holistic view of technology. Ensure that investments improve data quality and access, rather than creating further siloes.”
  3. “Ally with your firm’s suppliers to meet ESG imperatives. Adjust sourcing strategies for low-carbon business and work with suppliers to deliver ESG standards.”
  4. “Boost your organization’s supply chain resilience by adopting just-in-case thinking. Stabilize your firm’s supply chains at the first indication of a crisis and codevelop long-term strategies with your suppliers to make your company more resilient and future fit.”

We’d love to hear your thoughts on the evolving role of procurement in today’s business landscape. How do you see procurement driving growth and resilience in your organization? Share your insights and join the conversation in the comments section below.

Please read the full report here:

Procurement-A-CEOs-Secret-Weapon-for-Growth-and-Resilience-in-Turbulent-Times-ForresterDownload
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Navigating Drought: Panama Canal Imposes Restrictions on Large Ships

by Editorial Team

The Panama Canal, a crucial artery of global trade, is grappling with a significant challenge – drought. As water levels drop, the canal authorities have imposed restrictions on large ships, a move that could have far-reaching implications for global trade and supply chains.

The Depth Dilemma

Effective from June 25, container ships navigating the Panama Canal will be restricted to a depth of 43.5 feet or 13.3 meters. This measure is a response to the shallower waters caused by the ongoing drought in the region, which has necessitated a series of depth restrictions since January. The largest vessels that traverse the canal, known as Panamax container ships, require at least 43 feet to pass through.

Avoiding a Traffic Stall

The canal authorities aim to prevent a situation akin to the infamous Suez Canal blockage in 2021 when the container ship Ever Given got stuck, causing significant trade and supply chain disruptions. The Panama Canal is responsible for 3.5% of global trade, and any disruption could have a significant impact on the global economy, which is still recovering from the COVID-19 pandemic.

The Impact on Shipping

The new restrictions mean that ships will have to carry less cargo or shed other weight to float higher in the canal. This could lead to shipping delays and increased capacity limits and surcharges for vessels passing through the canal. However, Liquid Natural Gas (LNG) carriers, which typically have a depth of 37 feet (11.2 meters), will not be affected.

The Trade Route Most Affected

The Northern Europe to South American West Coast corridor is the trade route most impacted by these restrictions. This route has experienced volatility since 2020, with issues related to shipping volumes and constant fluctuations in short- and long-term contract freight rate levels.

The Drought Situation

The region’s warmer and drier conditions, attributed to a lack of rainfall between February and April, are exacerbating the situation. The El Niño phenomenon, which warms sea-surface and air temperatures, is expected to lead to water shortages in the region, surpassing record lows by July.

Conclusion

The Panama Canal’s current predicament underscores the intricate relationship between climate change and global trade. As the canal grapples with the challenges posed by drought, it serves as a stark reminder of the need for sustainable and adaptive strategies in managing global trade routes.

What are your thoughts on the impact of climate change on global trade routes? How can the shipping industry adapt to these challenges? Share your thoughts and comments below.

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Navigating Supply Chain Disruptions: Lessons from the Red Sea Crisis

by Editorial Team

From Disruption to Adaptation: How Businesses Can Build Resilient Supply Chains in Times of Crisis

The ongoing Red Sea crisis has exposed the vulnerabilities of global supply chains. In this insightful webinar, industry experts share their perspectives on mitigating risks, leveraging technology, and fostering agility to navigate through maritime disruptions successfully.

The escalating conflicts in the Red Sea have severely impacted logistics operations for shippers and 3PLs (third-party logistics providers) worldwide. The webinar “From Disruption to Adaptation: Navigating Through the Impact of a Red Sea Crisis” organized by the Global Supply Chain Council and supported by Infor Nexus, explores the potential risks to the global supply chain and how technology can help provide real-time visibility and sustainable data.

The webinar featured two speakers, Heidi Benko, VP of Product Marketing and Strategy at Infor Nexus, and Cas Brentjens, Vice President for Infor Nexus for Asia Pacific and Japan. Heidi Benko kicked off the session with a 20-minute presentation, followed by Cass Brentjens’ insights and a Q&A session with the attendees.

One of the primary impacts observed due to the Red Sea crisis is the increase in transit times. Heidi Benko shared network insights from Infor Nexus, highlighting the extended transit times across various lanes, particularly for shipments to Rotterdam, where transit times continued to rise. She also noted that transit times to North America had increased by approximately ten days.

“We continue to see that transit times are increasing, but in some cases, as you can see, some are coming down, right? But still longer than normal due to the rerouting transit times.” – Heidi Benko

Blank sailings (canceled sailings) have also been a concern for shippers, leading to increased rates and additional delays. Additionally, the webinar discussed the ripple effects of the crisis, such as increased dwell times at Asian transit ports due to longer transit times from origin.

To navigate through this disruption, companies have adopted various strategies depending on their supply chain setups. Some have opted for rerouting, either around the Cape of Good Hope or shifting to the West Coast and relying on rail or road transportation to reach their destinations. Others have turned to air freight for urgent shipments, while some have chosen to deal with the delays and factor in the additional transit times.

“Some companies are just, obviously we’ve got it rerouting, right, we’re not going through the Red Sea, so going through the Cape of Good Hope, and just, you know, we’re already dealing with ocean shipping, just allowing for that transit times.” – Heidi Benko

Heidi Benko emphasized the need for real-time visibility and the ability to quickly assess the impact on supply chains. She demonstrated Infor Nexus’ Control Center, a supply chain platform that provides live vessel tracking, shipment details, order information, and inventory levels, enabling users to make informed decisions and collaborate with their 3PLs efficiently.

“I need to understand and see my entire supply chain, where I have inventory throughout my supply chain. Where are the statuses of my orders? Which orders are critical? All of that stuff. I need that in one place so I don’t have to go to multiple systems and play a game of phone tag between functions such as transportation, planning, warehouse etc.” – Heidi Benko

Cas Brentjens highlighted the importance of digitization and having a resilient supply chain strategy that extends beyond the Red Sea crisis. He emphasized the need for companies to start their digitization journey, ensuring that contracts, shipping instructions, and bill of lading are digitized, enabling real-time tracking and traceability.

“If you want to sense and respond fast, I think digitization is the first step to get there.” – Cas Brentjens

Throughout the Q&A session, the speakers addressed various concerns raised by attendees, including the impact on shipping rates, the feasibility of working with specific carriers, the role of technology in providing visibility, and the need for proactive measures to prepare for future disruptions.

Key Takeaways:

  1. Embrace Agility: Supply chain disruptions are becoming the new norm, and businesses must be prepared to adapt quickly. Fostering agility through real-time visibility, collaboration, and strategic network design is crucial.
  2. Invest in Digitization: Digitizing supply chain processes, contracts, and data exchange enables companies to sense and respond rapidly to disruptions, improving resilience and decision-making.
  3. Leverage Technology: Supply chain technology solutions, such as control towers and business networks, provide end-to-end visibility, impact analysis, and collaboration capabilities, empowering organizations to navigate crises effectively.
  4. Diversify Strategies: Implementing a multi-modal transportation strategy, evaluating alternative routes, and collaborating with logistics partners can help mitigate the effects of disruptions and ensure continuity.
  5. Continuous Improvement: Supply chain disruptions are inevitable. Companies should continuously review and enhance their contingency plans, leveraging lessons learned from past crises to future-proof their operations.
  6. Consider all stages of your end-to-end supply chain, including Trading Partner Management, Sourcing and Procurement Processes, Warehousing, Transportation, and Delivery, into your visibility platform.
  7. A sense and respond control tower enables proactive, AI based, data-driven decision-making and rapid response capabilities, allowing organizations to adapt quickly to changes and disruptions in the supply chain environment. It promotes agility, efficiency, and competitiveness in today’s dynamic business landscape.

As the world grapples with the ongoing Red Sea crisis and other potential disruptions, businesses must prioritize supply chain resilience and agility. Share your thoughts and experiences in the comments below. How has your organization adapted to recent supply chain challenges? What strategies have proven effective in mitigating risks and fostering continuity?

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Decoding Global Supply Chains: Insights Every CEO Needs to Know

by Editorial Team

The global supply chain landscape is rapidly evolving, driven by geopolitical shifts, technological advancements, and a push for sustainability. Explore the key strategies and insights CEOs need to navigate these changes effectively.

The global supply chain is undergoing a seismic shift, fueled by the need to minimize disruptions from geopolitical tensions, pandemics, and climate-related events. This transformation is not only physical but also digital, impacting where factories are located, how they are managed, and how businesses operate globally.

The Reshoring Trend

A report from the Capgemini Research Institute highlights a significant trend: companies are investing $3.4 trillion in new or modernized capacity, with nearly half of this investment focused on onshoring. This shift is driven by the desire to mitigate risks associated with concentrated production and to adapt to rising protectionism. Governments are incentivizing key industries to ensure national capacities in critical sectors like medicines, vaccines, and computer chips.

Technological Advancements

The rise of automation, AI, and other technologies is revolutionizing supply chains. Robots, hyper-automation software, and additive manufacturing are becoming cost-effective enablers, reducing dependency on human labor and enabling more efficient operations. For instance, Unilever’s digital transformation of its supply chain has led to a significant reduction in processes and increased operational resilience.

Sustainability and Compliance

Sustainability is a major focus for companies, with many targeting zero emissions across their operations. This includes Scope 1, 2, and 3 emissions, covering everything from direct operations to supply chain partners and product users. Capgemini’s alliance with Kuehne+Nagel, for example, aims to offer integrated services that enhance sustainability and operational efficiency.

Case Studies

Unilever and L’Oréal are prime examples of successful supply chain transformations. Unilever’s integration of supply chain and IT functions into Unilever Business Operations has streamlined processes and enabled rapid digital innovation. Similarly, L’Oréal’s overhaul of its logistics strategy to meet omnichannel demands showcases the importance of agility and customer-centricity in supply chain management.

Key Takeaways

  1. Resilience and Adaptability: Companies must build resilient supply chains capable of withstanding global disruptions.
  2. Technological Integration: Leveraging advanced technologies is crucial for efficiency and scalability.
  3. Sustainability: Emphasizing sustainability is not just a regulatory requirement but also a competitive advantage.

Engage with Us

How is your company adapting to these supply chain changes? What technologies are you leveraging to enhance resilience and sustainability? Share your thoughts and join the conversation in the comments below.

Conclusion

Navigating the complexities of global supply chains requires a deep understanding of current trends and strategic investments in technology and sustainability. By adopting a forward-thinking approach, CEOs can ensure their companies remain competitive and resilient in an ever-changing global landscape.

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2023 Logistics Supply Chain Risk Report

by Editorial Team

Without logistics most supply chains would grind to a halt, as the world discovered during the pandemic.

As we emerge into more normal trading conditions, businesses across industry are looking to logistics providers to help them improve and optimize how they move and store goods between their supply chain nodes.

Meanwhile, logistics companies face their own supply chain challenges, including workforce issues, rising wage demands, global geopolitical and trade tensions and pressure to decarbonize transportation.

How are logistics businesses adapting?

To find out how the sector is navigating this changing landscape, we surveyed 100 risk and supply chain leaders, from freight forwarders to shipping lines, airfreight operators and trucking companies.

How do they see the supply chain landscape? How are they building resilience? What are the main challenges and risks they face? And what will the supply chains of the future look like?

About our survey

When: November – December 2022

Who: 100 senior decision makers, including risk managers, supply chain and logistics managers and CEOs.

Where: Countries across Europe, North America, Asia-Pacific and Latin America.

Size: All companies surveyed had annual revenue over $250 million.

Ripple effect increases risk burden for logistics

Logistics is at the core of every industry’s supply chain. That means the sector’s risks are multiplied.

From cyber-attacks to extreme weather, firms need to worry not only about their own operations, but also the knock-on impact on their customers and how that might rebound on them.

Cyber risks

In our survey, cyber risks were believed to have the most profound impact on supply chains, rated by 58% as medium and 31% high impact.

58% believe cyber risks to have medium impact on supply chains and 31% said it would have high impact.

Freight companies are sharing more data with partners and customers than ever before, while the number of parties in logistics chains, often using linked systems, means there are more potential weak links for cyber criminals to exploit.

Because delays are costly for logistics companies and their customers, criminals may think they are more likely to pay to end a ransomware attack, making the industry a more attractive target.

Climate and environment

Almost half (47%) of respondents placed climate change and environment among the top global trends affecting supply chain risks.

Logistics firms are under a lot of pressure to help their clients meet their carbon reduction targets.

But there’s also pressure from governments to reduce emissions from transport more generally.

Climate impacts are also being felt in extreme weather events, which are increasing in frequency and pose a growing disruption risk.

Increased product complexity

Increased product complexity topped the list of underlying factors playing the greatest role in supply chain risks, named by 35% as a top concern.

This may reflect the challenges of transporting increasingly specialized and sensitive products and raw materials, for example for in the life science sector, especially as clients demand more contractual indemnities against delay and damage.

Greatest challenge to addressing risks over next 3-5 years

Bar chart with 5 data series.

Question: Which of the following will pose the greatest challenge to addressing your risks over the next 3 to 5 years?

Participants were asked to rank top 3

The chart has 1 X axis displaying categories.

The chart has 1 Y axis displaying Values. Data ranges from 0 to 0.

ValuesLack of access to insurance and risk transfer solutionsLack of data, knowledge and understanding of these risksLack of internal risk management tools and insightLack of budgetLack of board buy-in0WTW

Greatest challenge to addressing risks over next 3-5 years

Question: Which of the following will pose the greatest challenge to addressing your risks over the next 3 to 5 years?

Participants were asked to rank top 3

End of interactive chart.

Economic risks

Economic uncertainty emerged as the second leading factor underlying supply chain risks, ranked by 30% among their top concerns.

The sector is at risk from price and wage rises, volatile fuel and energy costs and falling consumer demand.

If inflation dips back to near normal levels by the end of 2023, it could ease some of these pressures.

Geopolitical risk

Geopolitical risk was among the factors thought to have the greatest impact on supply chain risks, rated by 54% as medium and 29% high impact.

“The Ukraine conflict has disrupted some road and rail routes between Asia and Europe, while simmering tensions in the China Sea could put cause problems for more global routes in the future.” Breda Keating | Director, Global Marine, International Trade & Logistics

The conflict in Ukraine has disrupted some road and rail routes between Asia and Europe, while simmering tensions in the China Sea could put cause problems for more global routes in the future.

We’re also seeing more claims against logistics firms for customs errors as a result of complex documentation requirements post-Brexit.

Onshoring

48% of respondents said onshoring and near-shoring were among the top global trends affecting their supply chain risks.

As more products are sourced and manufactured closer to home, there will be fewer goods being transported around the world, which will impact demand for logistics services.

Pandemics

Though we may be past the acute disruptive impacts of COVID-19, the risk of a new strain of the virus, or a new unforeseen pandemic, seems to be still front of mind, topping the list of global trends with the greatest influence on supply chain risks at 56%.

3 key findings

63% said losses related to the supply chain had been higher or much higher than expected over the last two years.

85% of businesses said they have made at least some improvements in their approach to supply chain management in response to the pandemic.

77% cited a lack of insurance solutions among the greatest challenges to addressing their risks over the next three to five years.

Squaring the logistics circle

Logistics companies see supply chain risk from all angles. They need to manage not only their own risks but those of the companies they work for.

That’s not an easy balance to strike.

These challenges look set to grow as the risk of supply chain disruption stays high and customers demand more, both in terms of service delivery, sustainability and contractual obligations.

“Wider external factors, from geopolitics to cyber security increase the need for careful risk management.” Anthony Monaghan | GB Industry, Transportation Leader

Wider external factors, from geopolitics to cyber security increase the need for careful risk management.

Our survey shows that businesses are working to overcome problems and considering a range of strategies to increase resilience.

But they’re hampered by a lack of appropriate insurance solutions and difficulty getting hold of enough accurate data to manage their risks.

Working more closely with customers and partners can help companies understand their supply chains better and address these risks.

Diagnostic mapping and monitoring tools and analytics can help to visualize, quantify and assess risks across the chain and in specific locations.

See the original post on https://www.lexology.com/library/detail.aspx?g=9843ae71-6497-4d1c-9668-4f5cbdaa8440

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Building Business Resilience: A Deep Dive into Accenture’s “Resiliency in the Making” Report

by Editorial Team

In a world rife with disruptions, how can businesses not just survive but thrive? Dive into Accenture’s “Resiliency in the Making” report to discover actionable insights and strategies for building a resilient business model.

The “Resiliency in the Making” report by Accenture delves into the critical issue of business resilience in the face of various disruptions. From global pandemics to geopolitical unrest, businesses have faced numerous challenges that have revealed dangerously low levels of resiliency within engineering, supply, production, and operations. According to the report, this vulnerability has caused businesses to miss out on a staggering $1.6 trillion in revenue growth opportunity on average each year.

The Cost of Low Resiliency

The report highlights that many businesses have resorted to short-term fixes, such as inventory buildup, which has reached a value of $1.9 trillion. These reactive strategies have led to a 40% increase in product order-to-delivery lead times over the last two years.

Timeline of Recent Disruptions

The report provides a timeline of disruptions that have impacted businesses:

  • 2020: Global pandemic, rise in demand for digital products, and truck driver shortages
  • 2021: Cyber-attacks on production lines, semiconductor shortages
  • 2022: War in Ukraine, raw material and critical mineral shortages
  • 2023: Inflation, global talent shortages, extreme weather events

Three Actions to Build Resiliency

The report suggests three key actions for building business resiliency:

  1. Invest in Visibility and Predictability: Companies that invest in technology focused on visibility, predictability, and continuity can revolutionize their operations.
  2. Adapt and Advance: Businesses should adapt to challenges and make their production processes more resilient.
  3. Harness the Power of Disruption: More resilient companies have been able to capture an additional 1.2 percentage points in EBIT margin compared to their less resilient peers.

Key Takeaways

  • Resilient companies are alerted to disruptions faster and recover sooner.
  • Investing in the right mix of resiliency-focused capabilities can lead to better business results.

Concluding Remarks

The “Resiliency in the Making” report by Accenture serves as a comprehensive guide for businesses looking to build a resilient model that can withstand various disruptions. The time to invest in resiliency is now, and the report provides actionable insights to achieve that.

Engage with Us

We’d love to hear your thoughts on building business resilience. Have you implemented any of these strategies? What challenges have you faced? Feel free to share your experiences and questions in the comments below.

Note: All quotes and data are sourced from the “Resiliency in the Making” report by Accenture.

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The Power Play: U.S. Concerns Over China’s Potential Weaponization of Supply Chains

by Editorial Team

As global interconnectivity increases, the control structure is shifting. One such change is the growing concern in the United States that China may use its dominance in global supply chains to advance its political and military goals. This article examines these concerns and their potential geopolitical and global trade implications.

The American Perspective

The United States has expressed growing concern regarding China’s impact on global supply chains. According to the “Annual Threat Assessment” report published by the Director of National Intelligence, there is concern that China may use its supply chain dominance as a strategic weapon to bolster its political and military power.

Supply Chain Dominance of China

China holds a formidable position in global supply chains. The nation has already utilized its supply chain dominance to compel foreign firms and nations to transmit technologies and intellectual property. This strategy has allowed China to acquire a competitive advantage in numerous industries, from manufacturing to technology.

The Double Threat

The U.S. intelligence community believes Beijing could secure regional and global influence by combining its economic and military dominance. This dual menace has the potential to reshape the geopolitical landscape, which would have significant implications for international relations and global trade.

China’s potential weaponization of supply chains highlights the intricate interplay between economics and geopolitics in the interconnected world of today. As nations contend with these transforming dynamics, the need for strategic foresight and adaptable policies becomes ever more crucial.

What are your thoughts on the possibility of supply channels being weaponized? How can countries navigate these intricate dynamics? What strategies should the United States employ to address these concerns? Share your insights and comments in the section below.

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Navigating the Battery Supply Chain: The Challenge of Excluding China

by Editorial Team

The rise of electric vehicles (EVs) has created a demand for lithium-ion batteries never before seen. However, the supply chain for these batteries is not without obstacles, especially considering China’s market dominance. This article examines the complexities of the battery supply chain as well as the geopolitical ramifications of China’s control over it.

The dominance of China in the battery supply chain

For the resilience of supply chains in other nations, including the United States, China’s control over the battery supply chain is a significant concern. To satisfy the estimated global demand, the production of lithium-ion battery-required minerals must increase by a third annually during this decade. This implies that tens of millions of batteries will be required in the United States alone in order to meet its goal of achieving 50 percent EV sales by 2030.

Ensuring a steady supply of battery components

The majority of battery supply chains are headquartered in Asia, where the initial production and processing constraints occur. Lithium and nickel, two essential battery components, are especially vital to secure a steady supply of. Australia produced nearly half of the world’s lithium in 2022, followed by Chile (30%) and China (15%). Indonesia produced 48 percent of the world’s nickel, followed by the Philippines (10 percent) and Australia (5 percent).

The American Response to Supply Shortages

In order to alleviate these supply constraints, the United States is pursuing narrow trade agreements with countries such as Australia and Chile in order to obtain access to minerals and production capacity. Through the Inflation Reduction Act, the government is also providing significant subsidies to producers. To qualify for the $7,500 credits for new EVs, producers must meet certain requirements regarding mineral processing and battery production location, with an emphasis on avoiding Chinese involvement.

The Challenge of Creating a Supply Chain Without China

Meanwhile, China is constructing its own parallel battery supply chain. Indonesia’s dominance in nickel production could impede the production of electric vehicle batteries. By 2035, it is anticipated that 2,7 million tonnes of nickel will be required annually for electric vehicles. However, Indonesia presently only produces 1,6 million tonnes, the vast majority of which is used to produce stainless steel. Efforts are being made to increase nickel mining and processing capacity, but China’s established expertise makes it difficult to establish a supply chain that is independent of China.

Developing a reliable battery supply chain outside of China is a challenging and uncertain undertaking. However, the increasing global demand for electric vehicles and the pressing need to reduce greenhouse gas emissions make it imperative for nations to aspire for a robust and diverse battery supply chain.

What are your perspectives on China’s role in the global supply chain for batteries? How can nations diversify their supply chains to diminish their reliance on China? How should the United States ensure a consistent supply of battery materials? Share your insights and comments in the section below.

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Redefining Trust in Global Supply Chains

by Editorial Team

The Evolution of Supply Chain Trustworthiness and Its Impact on Business Success

Introduction
In today’s rapidly changing global landscape, the trustworthiness of supply chains has become a paramount concern for businesses. As companies grapple with unforeseen challenges, from geopolitical tensions to resource shortages, the question arises: How can organizations ensure their supply chains remain reliable and gain the trust of their stakeholders?

The Trust Deficit in Supply Chains
Recent events have highlighted the vulnerabilities in global supply chains. For instance, a major European beverage manufacturer faced challenges like high energy bills, aluminum can shortages, and reduced availability of cargo vehicle drivers due to policy changes. Such disruptions have led to increased costs, delayed product deliveries, and a subsequent erosion of customer trust.

The Post-Pandemic Supply Chain Landscape
While the immediate challenges of the COVID-19 pandemic may have subsided, the aftershocks continue to reverberate. Supply chain disruptions have become commonplace, with 77% of executives admitting to experiencing adverse supply chain events in the past year (Deloitte survey). Moreover, 44% of these executives anticipate more disruptions in the coming 24 months. These challenges range from price volatility and inflation to labor shortages and geopolitical instability.

The Trust Equation
Trust in supply chains is multifaceted. It’s built on capability, reliability, humanity, and transparency. While capability and reliability focus on an organization’s competence, humanity and transparency emphasize its intent. For businesses, this means not only delivering products efficiently but also doing so in a manner that is transparent and respects all stakeholders.

Leading with Trust
Top-performing supply chain organizations prioritize actions that foster reliability and transparency. They invest in technologies like digital threads and predictive algorithms to enhance supply chain predictability. Moreover, they emphasize visibility, especially concerning environmental, social, and governance (ESG) factors. For instance, leading companies are more likely to have visibility into their scope 3 emissions, which are indirect emissions produced by customers and suppliers.

Humanity as a Competitive Edge
The human aspect of supply chains, though often overlooked, can be a significant differentiator. Leading supply chain organizations prioritize talent development and align their operations with customer values. By treating stakeholders with empathy and fairness, companies can build stronger, more trusting relationships.

Conclusion: Building the Trustworthy Supply Chain of Tomorrow
For supply chain executives, the path forward involves a delicate balance of enhancing competence while also prioritizing intent. By investing in technology, focusing on transparency, and emphasizing humanity, businesses can build more resilient and trustworthy supply chains. As the global landscape continues to evolve, those that prioritize trust will be better positioned to navigate challenges and seize new opportunities.

What are your thoughts on the evolving nature of supply chain trustworthiness? How is your organization addressing these challenges? Share your insights and join the conversation below.

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