Supply chain shortages likely here to stay after COVID pandemic



Kate Marino | Yahoo News

Supply chain snarls are probably here to stay. That’s not to say that today’s specific challenges won’t abate at some point. But there will be new ones — different from our current variety of chip shortages and a dearth of truck drivers.

Why it matters: Pandemic-driven turmoil may have put supply chains on the public’s radar, but major disruptions were picking up even before COVID — think trade wars, Brexit, and an increasing number of extreme weather events.

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Meanwhile, some of the most disruptive events of the COVID era were not COVID-related: the Texas freeze, Hurricane Ida, cargo ships stuck in canals.

What they’re saying: “Supply chain disruptions will continue to happen both more frequently, and with potentially larger magnitude,” Dan Swan, co-lead of McKinsey’s operations practice, tells Axios.

For companies, these issues have grown from being a responsibility handled by operations teams, into a CEO-level priority — and that’s likely to continue, he says.

State of play: In McKinsey’s latest survey of global supply chain leaders, released today, 92% of respondents said they had changed their supply chain footprints in the last year to boost resilience.

That compares to the less than three-quarters who thought they’d do so, as of the same survey last year.

What’s next: Almost 90% of survey respondents expect to pursue some sort of regionalization — moving certain operations, like factories, closer to customers — during the next three years (Ford and GM, for example, are both forging deals with chipmakers to produce domestically).

And it’ll be more common for companies to ask for information about their suppliers’ suppliers — because breakdowns there can ripple through the chain, Swan says.

We’re not there yet: Less than half of the company leaders in McKinsey’s survey said they understand the risks their key suppliers face.

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