How to build supply chain resilience in volatile times

When trends in freight costs look like this, it’s hard to build supply chain resilience. This chart (from Statista.com) shows that costs of shipping containerized freight from China to Europe increased significantly between January 2019 and November 2022, before dropping dramatically during 2022.

What do such trends mean for consultants and their clients? The Business Continuity Institute (BCI) reports that the level of supply chain disruption reported by organisations is still more than twice as high as pre-pandemic levels. Almost half of respondents said they’d experienced issues with their closest “Tier 1” suppliers during 2022, while a quarter experienced disruptions at the Tier 2 level. Economic slowdowns, talent shortages and geopolitical conflicts such as Russia’s invasion of Ukraine and US-China tensions mean there are still many challenges ahead for supply chains.

And yet the BCI report warned that businesses were also displaying a level of “overconfidence” – unchanged from pre-pandemic levels. Just one in three organisations had checked their Tier 1 suppliers’ business continuity plans. Fewer than six in ten firms reckoned their key suppliers had business continuity plans in place, putting the whole supply chain at risk.

• Managing supply chain disruption in the wake of Covid-19
• Management in a crisis: derisking supply chains amid war and rising costs