Tectonic Shifts in Global Supply Chains

How should supply chain professionals deal with major geopolitical upheaval? Russia’s reprehensible invasion of Ukraine, which has been met with unprecedented sanctions, is causing huge disruption for the world of business and supply chains. Supplies of agricultural products and raw materials from Ukraine, as well as components for the automotive industry, have come to an almost complete standstill. Whether because of government sanctions or voluntary business decisions by high-profile multinationals, Russia has been almost entirely ostracized as a sales market for companies in the West. The New Silk Road rail route through Russia is off limits and freight is now being diverted via Turkey, resulting in reduced capacity. In addition, fuel prices are still skyrocketing, plus numerous Ukrainian truck drivers working in Europe are returning home to help defend their country against the Russian invasion.

A couple of years ago, I played an international war game in a training session run by specialized military strategists. The scenario for the game was that the Russian army had crossed the border into the Baltic state of Estonia to help extinguish a huge forest fire there. In my fictional role as military commander of the Latvian army, it was fascinating and exciting to watch the various military and diplomatic phases unfold. Our game ended with a peaceful outcome. Unfortunately, that’s a far cry from today’s reality in Ukraine.

Not long after the recent Russian invasion of Ukraine, I discussed the developments and their implications in an online session with Dutch supply chain directors. I showed them my visual of the impact of the COVID-19 pandemic: stones being thrown into the water causing multiple, overlapping ripple effects on the surface. Together, we concluded that companies need to map out the various ripple effects that could affect them, and then determine how likely these possible disruptions are and how they can prepare for them.

Remember, lurking beneath the water are the tectonic plates of dormant geopolitical frictions. These plates can shift suddenly and unexpectedly, with potentially catastrophic consequences. That’s why for the past few years my motto has been: ‘Expect nothing, but be mentally prepared for everything’. Let’s hope that the Russian military’s atrocities in Ukraine will soon come to an end.