Businesses should prioritise safety and reliability over profit

24 May 2024
There is no quick solution to decoupling supply chains from China

Businesses are advised to prioritise safety and reliability over profit in the face of increasing geopolitical tensions and supply chain disruptions, says a recent report by GlobalData.

The report highlights the complexity and expense of reworking supply chains, with no quick solutions in sight. The data underscores the dominance of China in global supply chains, from raw materials to end products, making decoupling from the country virtually impossible.

Despite billions of dollars in government aid directed towards reshoring supply chains, a significant shift away from China is unlikely. The study also points out that companies are increasingly susceptible to cyberattacks, especially those with complex supplier networks.

Supply chain attacks, where bad actors compromise a company's security using connected services owned or used by suppliers, are becoming more common. Physical security is another growing concern, particularly in transportation.

In the Middle East region, attacks by Houthi rebels on ships in the Red Sea is an example of growing security concerns. The most serious threats to trade, supply chains, and investment occur when geopolitical tensions erupt into actual armed conflict.

Such conflicts risk raising inflation and commodity prices and disrupting aerial, land, and maritime routes. The report suggests that to improve supply chain resilience, companies should consider relocating production closer to home, diversifying their supply chain, digitalising their networks, and adopting a circular economy model.

The report concludes by emphasising that in today's digital world, businesses need to be proactive and strategic in managing their supply chains to navigate the increasing risks and challenges.

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.