Above the Fold: Supply Chain Logistics News (February 25, 2022)

Russia invades Ukraine.

The headline was anticipated for months (actually, years), but it finally came true this week.

Now what?

Russia Invades Ukraine: Now What?

It’s the same question many companies find themselves asking whenever a disruptive event occurs. As always, companies that have been proactive in mapping their supply chains, and developing digital twins of their supply chains to model and simulate different “What if?” scenarios, will be in the best position to respond quickly and effectively to whatever happens in the weeks and months ahead.

According to data collected and analyzed by Interos:

  • More than 2,100 U.S.-based firms and 1,200 European firms have at least one direct (tier-1) supplier in Russia.
  • More than 450 firms in the U.S. and 200 in Europe have tier-1 suppliers in Ukraine.
  • Software and IT services account for 13% of supplier relationships between U.S. and Russian/Ukrainian companies. Consumer services represent another 7%.  About 6% account for trading and distribution services and 4% for industrial machinery. Oil, gas, steel and metal products account for other everyday items purchased from the two countries.
  • More than 190,000 firms in the U.S. and 109,000 firms in Europe have Russian or Ukrainian suppliers at tier 3.
  • More than 15,100 firms in the U.S. and 8,200 European firms have tier-2 suppliers based in Ukraine.

Now what? Well, if you’re asking yourself that question for the first time now, it’s a little too late. You should have been planning for this scenario months or years ago. But it’s not too late to prepare for the next “What if?” scenario, like “What if a cyber attack shuts down our supply chain?” or “What if China invades Taiwan or stops exporting rare-earth minerals?”

For some recommendations on how to get started, see “How To Sleep In A Supply Chain Storm.”

However, the answer to “Now what?” is never clear and simple, nor quick and easy to implement. In many ways, once a disruptive event has occurred, the goal is figuring out how to minimize its impact and recover faster than the competition. Again, companies that have done this analysis upfront — and have implemented risk management metrics such as Time to Recovery (TTR) and Time to Survive (TTS) — will outperform their competition when supply chain disruptions occur. 

There is another question in this case that is also difficult to answer: Why?

Watching the scenes unfold in the Ukraine on television, I am reminded of the final sentence in “The Book Thief,” where the narrator of the story (Death) ends with, “I am haunted by humans.”

May our better angels prevail.

Song of the Week: “99 Luftballons” by NENA