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By Jean-Michel Guarneri, President France Supply Chain International
Supply Chain at the time of the war in Ukraine
After health and climate risks, managing geopolitical risk
The Ukrainian conflict, before being an economic crisis and a supply chain concern, is first and foremost a human tragedy: it is war with all its horrors. Today, the Supply Chain's priority is to be able to deliver food and basic necessities to a suffering population.
Beyond this emergency mission, the war in Ukraine has several consequences for the supply chain. Even if the latter showed resilience during the Covid crisis, no one was prepared for a geopolitical crisis of this magnitude, progressively closing off access to a trade zone the size of a continent.
Companies operating in Russia are exposed as employers, customers and/or suppliers. Some have opted to simply abandon all activity in Russia by freezing their trade flows, in order to protect their staff. Others have not yet taken this step, especially companies with distribution networks and large factories in Russia. They have to protect and take care of their employees and they are trying to continue to supply the shops so as not to penalise the local population, while respecting the economic sanctions.
In the medium term, the entire global supply chain will be affected. Companies have adopted a strategy of bypassing the war zones from the west via Scandinavia or from the east via China and Singapore, with the consequences of higher costs and limited and uncertain transport capacities. They have all created crisis units to reorganise their flows and decipher the economic sanctions, in particular to analyse products that may have a military use and be banned from sale in Russia. For those who continue to deliver to Russia, they do so ex works, prepaid goods. Insurance contracts no longer cover goods transported and means of transport in conflict zones.
From now on, in this even more "VUCA" (Vulnerability, Uncertainty, Complexity, Ambiguity) world, the main challenge for the Supply Chain is to be more resilient and to be able to adapt permanently to major health, climatic or geopolitical risks. Unfortunately, these phenomena will no longer be the exception in the coming years and will become a permanent feature of the international trade landscape.
HIGHLIGHTS
Logistics, Putin's Achilles heel?
What if the Achilles heel of the Russian Army was its logistics? Since the beginning of the invasion of Ukraine, some observers have been asking this question. Indeed, the imbalance of the forces present could lead one to think that the conquest of the Ukrainian territory would only be a formality for the tanks of President Putin. He himself had probably imagined a lightning invasion, settled in 48 hours. This was to underestimate the determination and courage of the Ukrainians, but perhaps also the strategic importance of logistics. "Nearly a week after the start of its invasion of Ukraine, the Russian army's progress has been halted by the Ukrainian resistance, by its strategic errors, as well as by its logistical shortcomings", as Le Figaro put it last week. Since the Gulf War, and even since the landing of the Allies in Normandy, we know that for one soldier at the front, it takes several dozen in the rear to supply ammunition, food, fuel ... And that this logistics is not improvised! Just like industrial logistics (which it inspired), military logistics requires adapted means, organisation, anticipation, planning and above all perfectly trained and competent personnel. As such, it represents an essential element that conditions success in the theatre of operations. The days to come will tell us if this supposed weakness is confirmed. In which case it would be an element to be taken into account in the balance of power between the Russian Goliath and the Ukrainian David.
NOT TO BE MISSED
Young people speak out
On1 March, the Youth Lab launched its first programme on Radio Supply Chain. A weekly appointment in which young people come to tell their story and their vision of the Supply Chain.
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