Supply chain challenges resulting from both the COVID-19 pandemic and Russia’s invasion of Ukraine could cause a potential €920 billion cumulative loss to gross domestic product (GDP) across the Eurozone by the end of 2023, according to a recent report by Accenture.
In this week’s Industry Today feature, Bart De Muynck, Chief Industry Officer at project44, writes that this situation isn’t likely to improve soon. COVID and the war in Ukraine created challenges for supply chains in energy, transportation, manufacturing, healthcare, and food.
Further exacerbating these disruptions are the effects of natural disasters such as the earthquakes in Turkey and widespread flooding across Germany and its neighbors, climate change, inflation, and rising consumer prices.
The newly introduced EU Supply Chain Act is an after the fact attempt to address these issues. According to De Muynck, “The draft…requires EU companies to carefully manage social and environmental impacts along their entire value chain, including direct and indirect suppliers, their own operations, as well as products and services. The aim is to ensure compliance with applicable human rights standards and environmental protection to promote a fairer and more sustainable global economy as well as responsible corporate governance.”
There is a cost to this regulation, however, that further imperils the reliability of European supply chains. “In Germany, the government’s own estimates of the law’s direct cost to the country’s firms in time and toil are €110m this year and €43.5m every year after.”
The best response, De Muynck writes, is “more agility and resilience from companies. Supply chains must be able to absorb, adapt to and recover from disruptions whenever and wherever they occur. This requires improved real-time visibility, risk identification, and mitigation solutions. Better and more real-time data to adjust and finetune demand and replenishment plans as well as scenario planning will help them adapt to evolving supply and demand.”
Read the complete article, The Current State of European Supply Chains.
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