The analysts at Gartner recently offered advice meant to help companies navigate the choppy supply chain waters created by the Israel-Iran conflict, identifying three critical priorities for chief supply chain officers (CSCOs) to implement now to secure their operations, as circumstances push Gartner into the geo-political realm.
The on-going conflict creates risks to critical raw materials and the continued flow of finished goods, Garter says, requiring supply chains to conduct cost-benefit analyses of mitigation actions in partnership with finance leaders. This includes evaluating potential impacts on margins and reviewing the product portfolio for vulnerabilities, says David Gonzalez, VP analyst in Gartner’s Supply Chain practice.
Gonzalez noted that “while many supply chain leaders have already invested in collaborative supplier relationships and risk mitigation, ongoing trade disruptions and regional tensions require a renewed focus.”
CSCOs, he says, should reassess existing supplier networks, confirm the viability of current mitigation plans, and address any overreliance on specific geographies to reduce exposure and ensure business continuity.
In response to the ongoing impacts from the conflict, CSCOs should take three actions, Gonzalez said in a recent Gartner blog post:
1. Assess and mitigate exposure to new global transportation bottlenecks
2. Prepare CFOs for continued supply chain cost volatility
3. Review supply chain resilience strategies
"As the conflict between Israel and Iran oscillates, CSCOs must leverage the resilience they have built in recent years, recognizing that the global significance of this region makes it nearly impossible to avoid adverse impacts, even if only indirect," added Gonzalez
The latest conflict is adding to significant bottlenecks across the region’s key shipping routes and logistics hubs, including:
Red Sea and Suez Canal: Container traffic remains well below pre-crisis levels, with major shipping lines avoiding the Suez Canal. Organizations must monitor transit times and adjust expectations for longer lead times and higher costs.
Strait of Hormuz: Heightened risk of disruption is causing delays and congestion as companies seek alternative routes. Supply chain leaders should engage partners to identify and manage new shipping options.
Regional Ports: High-volume ports such as Jebel Ali, Khalifa Port, Dammam and Haifa face increased pressure, with some having already faced service interruptions. Contingency planning for alternative ports is essential.
Eurasian Rail Freight: Demand for rail freight between Asia and Europe has surged, leading to congestion and longer booking times. Organizations should trial rail options where feasible, weighing higher costs against faster transit.
Prepare CFOs for Cost Volatility
Ongoing disruptions in the Middle East are driving up supply chain costs across energy, transportation, insurance, inventory, and technology.
(See More Below)
|
CATEGORY SPONSOR: SOFTEON |
|
|
| |
| |
|
|
Gartner says that CSCOs must proactively engage CFOs to assess budget impacts and prepare for increased spending. Price volatility in crude oil and liquid natural gas (LNG) are elevating energy and fuel surcharges, while rerouted shipments and longer transit times are pushing up transportation rates. Insurance premiums for goods in transit continue to climb, and higher inventory levels are needed to safeguard against supply interruptions.
Review Supply Chain Resilience Strategies
Gonzalez notes that the conflict is putting previous supply chain resilience strategies to the test.
 “CSCOs must identify risks to critical raw materials, ensure the continued flow of finished goods, and conduct cost-benefit analyses of mitigation actions in partnership with finance leaders,” Gonzalez noted, adding that this includes evaluating potential impacts on margins and reviewing the product portfolio for vulnerabilities.
Gonzalez concludes by noting that while many supply chain leaders have already invested in collaborative supplier relationships and risk mitigation, ongoing trade disruptions and regional tensions require a renewed focus.
CSCOs should reassess existing supplier networks, confirm the viability of current mitigation plans, and address any overreliance on specific geographies to reduce exposure and ensure business continuity.
Any comments on Gartner's thoughts? Let us know your thoughts at the Feedback section below.
|
