Euromonitor recently released a video outlining four threats to the global supply chain and what they will mean in the short and long term.
Industrial insights manager at Euromonitor Justinas Liuimia said the manufacturing sector has made recoveries from the pandemic as factors like investment, production capacity and supply flow bounce back.
“There are still many risk factors that are beyond the control of companies and this will continue to put pressure on global supply chains,” Liuimia said.
Below are the four factors Liuimia outlined as risks to current and future supply chains.
Spread of omicron variant
While the COVID-19 pandemic isn’t causing the same sweeping disruptions to the supply chain as it did in the past years, Liuimia said omicron outbreaks may cause short-term disruptions across the supply chain.
However, as countries improve their pandemic management and vaccination rates improve he said the risk of omicron-based disruptions will be low.
China’s zero-COVID policy
While COVID poses a moderate risk to the supply chain overall, China’s zero-COVID policy poses a high risk to supply chains.
“China’s zero-COVID policy continues to pressure global supply chains as closures of supply chains in China disrupt the global supply of input materials and certain components,” Liuimia said. “This, in turn, increases manufacturing prices and adds delays in delivery times.”
He added that Euromonitor believes this disruption will also be short-lived and won't seriously affect the supply chain in the long term.
Transportation disruptions have contributed to shortages of input materials, increasing the cost of manufactured goods. Liuimia said those disruptions can look like insufficient port space and transportation bottlenecks.
While this has been a large disruption in 2022, Euromonitor expects transportation issues to moderate next year as capacity is added.
War in Ukraine
Russia’s invasion of Ukraine was the only risk factor Liuimia marked as high pressure in both the short and long term. He said the war is affecting the supply side of manufacturing by harming business confidence and disrupting transportation methods.
“These risk factors add to the risking prices and negative effects are predicted to be long lasting,” Liuimia said. “Looking into the future, it’s likely companies will make more efforts to make supply chains more resilient to similar disruptions in the future.”
Those preparations may look like production automation, supply chain diversification and e-commerce.