Addressing Another Threat to Supply Chains

What’s the best way for U.S. organizations to navigate the ongoing impacts posed by the Israel-Iran conflict? (That question is especially relevant now that the Trump administration has used “bunker buster” bombs in an effort to destroy Iran’s complex for developing nuclear weapons.) Research/advisory firm Gartner Inc. has identified three critical priorities for chief supply chain officers(CSCOs) to address to secure their operations in the midst of such volatility in the Middle East. They are:

• Assess and mitigate their exposure to new global transportation bottlenecks, including the Red Sea/Suez Canal and the Strait of Hormuz.
• Prepare CFOs for continued supply chain cost volatility. That includes keeping track of price fluctuations in crude oil and liquid natural gas; recognizing that rerouted shipments and longer transit times can push up transportation rates; and expect insurance premiums for goods in transit to continue to climb, along with keeping higher inventory levels to safeguard against supply interruptions.
• Review supply chain resilience strategies. Specifically, 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.

“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,” said David Gonzalez, VP analyst in Gartner’s Supply Chain practice.

Click here for more from the Gartner report.