Procurement in 2023: How Geopolitical Events Impact Supply Chains
In the ever-changing world of procurement, businesses face a multitude of challenges. One of the most significant hurdles is the impact of geopolitical events on global supply chains. From trade disputes to policy changes, these events can cause ripples that reverberate across industries, affecting procurement strategies and operations. In this blog, we’ll explore how geopolitical events influence procurement, backed by evidence and real-world examples and most importantly – explain the strategies to navigate this intricate maze.
Geopolitical Events and Supply Chain Disruptions
Geopolitical events such as trade wars, sanctions, and political upheavals, can disrupt supply chains and create uncertainties for businesses worldwide. For example, the US-China trade war has significantly affected international trade. A study by the National Bureau of Economic Research found that the trade war resulted in a substantial decline in trade between the US and China, leading to disruptions in supply chains and increased costs for businesses. Such events highlight the need for businesses using procurement services to stay vigilant, observe political developments and look for methods to counteract potential disruptions.
Diversification for Resilience
To mitigate the impact of geopolitical events, procurement professionals are increasingly focusing on diversifying their supply chains. Diversification involves going worldwide, sourcing from multiple suppliers and regions, reducing dependency on any single sources. Research by McKinsey & Company shows that companies with diversified supply chains were better equipped to withstand disruptions during the COVID-19 pandemic. By picking procurement specialists who engage with a diverse range of suppliers and markets, businesses can maintain stability and reduce the risk of supply chain disruptions caused by geopolitical events.
Managing Regulatory Changes
Geopolitical events often bring about policy and regulatory changes that can significantly impact procurement operations. For instance, Brexit introduced new customs and trade regulations between the UK and the EU. Businesses had to adapt quickly to comply with these changes and ensure seamless cross-border trade. A study by Deloitte revealed the on the impact of Brexit on supply chains revealed that 45% of businesses experienced disruptions due to new customs procedures and regulations. Working with procurement specialists who stay informed on such changes and proactively adapt their processes is a vital indicator for the success of your working relationship.
Geopolitical events are an inevitable aspect of the global business landscape. Working with specialists that understand the potential impact on supply chains is crucial for businesses to remain resilient and thrive. By working with procurement specialists with diverse supply chains that are abreast of regulatory changes, you’ll navigate the complexities of geopolitical events and steer your businesses towards success.
In the dynamic world of procurement, staying informed and proactive is the key to weathering the storm of geopolitical uncertainties. At Flashy Cactus, we combine our knowledge and expertise in both industry and geopolitical events to reach globally and source your products promptly at the most competitive prices.