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ASCM Insights

Weathering the Global Economic Storm

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As the old saying goes, April showers bring May flowers. Well, this April is bringing a full-on global economic storm. And the question facing supply chains everywhere is how to work through these difficult times in order to create brighter days for the future.

Many of the challenges are factors we’ve been tracking in SCM Now Impact throughout the past several weeks:

Ukraine: Amid the attacks and terrors happening in Ukraine, supply chains that touch that region have come to a halt. Ukrainian ports are closed, trade routes have been moved around the regions of conflict, and sanctions are hindering the flows of goods and money into and out of Russia. The ripple effects are being felt around the world.

Fuel prices: Natural gas supplies are also being choked off by the sanctions against Russia. In response, U.S. officials are releasing from reserves 1 million barrels of oil per day. But it’s still going to be a very tough road, as I noted on Good Morning America earlier this week. Consumers will pay more at the pump and in stores because more expensive fuel leads to more expensive material movement. Costlier gas has already contributed to rising food and beverage prices price in the United Kingdom.

Supply shortages: Factories across Europe are experiencing diesel and parts shortages as a result of cutting off Russian suppliers and interruption at Ukrainian suppliers. The German auto industry is grappling with a shortage of electric wire assemblies, which are usually custom-made in Ukraine. Neon, which is used in semiconductor production, is also scarce because Ukraine produces half of the world’s purified neon.

Food shortages: While some regions’ most pressing issues relate to lack of affordable and healthy food, a crisis of food scarcity is a potentially larger and longer-term issue. Because of the Ukraine invasion, the breadbasket of Europe is unable to supply the wheat, corn and grain that so many countries have come to rely on. Making matters worse, fertilizer shortages and farm labor disruptions could prevent Ukraine from planting and producing crops for the future.

COVID-19: The growing omicron variant is causing shortages and shipping disruptions in China, spurring more factory shutdowns and trade interruptions. A.P. Moller-Maersk reports that some depots serving local ports in China have closed indefinitely, and trucking to and from terminals will be severely impacted.

Avian flu: In the worst outbreak in seven years, about 18 million commercial table egg-layer hens and 2 million turkeys have been affected. The standard practice is to destroy all exposed birds, which means there will be less meat on store shelves and fewer egg-laying hens ahead of typical demand spikes at Passover and Easter. Retailers usually discount eggs around these holidays, but the wholesale cost for a carton of eggs in the U.S. Midwest has jumped 60% since the end of March.

As I told Good Morning America’s Amy Robach, increased supply chain visibility and transparency are how our industry professionals can and will improve the current situation. Supply chains everywhere must invest in some umbrellas for the storm, and ASCM is here to help with essential tools and education:

  • Digitize your supply chain to achieve necessary visibility and agility with the SCOR Digital Standard.
  • Access research to learn more about predictive analytics, such as artificial intelligence; scanning technology; and other tools to efficiently scale up and down to match supply and demand.
  • Address your supply chain’s most pressing challenges with ASCM Transformation Learning Programs, coaching and mentoring services that deliver proven organizational excellence.
  • Finally, discover how real-world organizations overcome disruption and create effective early-warning systems with The Resilient Supply Chain Benchmark, developed by The Economist Intelligence Unit and sponsored by ASCM. This resource provides the information to truly ensure your supply chain is ready for anything.

 

About the Author

Abe Eshkenazi, CSCP, CPA, CAE CEO, ASCM

Abe Eshkenazi is chief executive officer of the Association for Supply Chain Management (ASCM), the largest organization for supply chain and the global pacesetter of organizational transformation, talent development and supply chain innovation. During his tenure, ASCM has significantly expanded its services to corporations, individuals and communities. Its revenue has more than doubled, and the association successfully completed three mergers in response to both heightened industry awareness and the vast and ongoing global impact driven by supply chains. Previously, Eshkenazi was the managing director of the Operations Consulting Group of American Express Tax and Business Services. He may be contacted at abe@ascm.org.

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