Following the Russian invasion of Ukraine in February 2022, countries around the world responded with sanctions, blacklists, and boycotts, all of which severely impact global supply chains. In many cases, it is no longer possible to source from Ukrainian business partners. At the same time, many goods and materials that were purchased from Russian companies have been sanctioned. Critical exports from the two countries include commodities such as oil and natural gas, metals, grain, uranium and neon gas, or components, for example, lasers or wiring harnesses.
Prices on global markets have risen, some dramatically, accompanied by supply shortages. Such factors push up production costs, or can lead to production shortfalls. Skyrocketing energy costs across all industries also drive inflation. In turn, recession and economic downturn cause shifts in buying decisions and customer needs, which put existing business plans at risk.
High geopolitical tensions often interrupt transport routes, choke trading points, and result in disasters at business sites or force majeure. Insolvencies increase drastically, and cyberattacks amplify the vulnerability of supply chains. That is why good supply chain risk management includes cutting your exposure to geopolitical risk. By diversifying your supply chain, developing emergency plans, and putting proactive measures in place, you mitigate the impact of geopolitical events.