Amid challenges related to the global supply chain that are not expected to wane in the near future, CEOs should prioritize that aspect of their organizations, David Garfield, global head of industries for consulting firm AlixPartners, wrote in a Sept. 30 article in the Harvard Business Review.
Here are four notes on the sources of those challenges and how CEOs can prepare to face them:
- Ongoing conflicts and strained international relations, especially in regions critical to shipping, continue to threaten supply chain stability.
- The World Bank reported a significant rise in trade restrictions, with nearly 3,000 new measures enacted in 2023 — a fivefold increase since 2015.
- As more stakeholders demand greater environmental and social responsibility, with supply disruptions linked to sustainability issues and sustainability is an issue that extends across an organization's function and business units, along with reputation.
- Mr. Garfield recommended that CEOs and boards exercise supply chain leadership by improving financial flexibility, monitoring operational flexibility, enhancing organizational flexibility and using transformational technology. One key method is strengthening risk management and cybersecurity, while another involves ensuring there are backup sources for critical components.