Businesses around the globe continue to grapple with inflation brought on by the pandemic as well as commodity price increases brought on by disruptions to the supply chain. Amidst this ongoing volatility are the new consequences arising from the Russia-Ukraine crisis that could leave the world facing extended reductions to energy supply, severe sanctions that will likely impact food security as well as rare metal supplies needed to sustain production of key technologies. All of this, coupled with a significant humanitarian crisis makes the unrest even more complicated.
Dun & Bradstreet data scientists are tracking financial and diplomatic sanctions against organizations, individuals, and the breakaway regions of Ukraine that are likely to affect business, supply chains, trade, and finance across the region and worldwide. To assess the global business impact of the crisis, Dun & Bradstreet has created a special briefing report that analyzes how evolving events are causing a ripple effect to global supply chains and economies.
Impacts to Global Supply Chains
According to the report citing Dun & Bradstreet data, at least 374,000 businesses worldwide rely on Russian suppliers and at least 241,000 businesses across the world rely on Ukrainian suppliers. Countries with impacted supply chains include U.S., Canada, Italy, Australia, China, and Brazil.
In particular, research shows that European gas storage levels are critically low at 33% of capacity. And because of current EU sanctions on Russia, Germany has placed a hold on the Nord Stream 2 gas pipeline impacting 30 billion metric cubes of gas that were expected to enter the continent in 2022. Dun & Bradstreet data indicates that these issues, along with other geopolitical tensions and supply shortages will underpin high gas prices in the short-term. This is just one sector that will feel the strain of sanctions on global supply chains. A deeper look into commodities that dominate Russia’s exports can be seen below:
Chart: Major Exports from Russia and Ukraine
Source: UN Comtrade, Dun & Bradstreet
The full business impact of the Russia-Ukraine crisis will continue to unfold in the coming days. While we continue to monitor the situation, the report highlights the immediate implications including:
Best Practices for Building Resilient Supply Chains
With the sanctions and diminished access to commodities at hand and supply chain disruption to consider, business leaders would do well to pursue a better understanding — leading to better management — of their supply chains.
In the near-term, companies can rely on their alternative suppliers to fill resource gaps in their supply chain. The chart below highlights top alternative supplier countries:
Potential Alternate Suppliers for Major Products Exported by Ukraine and Russia
Source: UN Comtrade, Dun & Bradstreet
Additionally, here are some best practices to create an agile supply chain to help weather current and future disruptions:
- Develop a risk-based assessment process to identify specific risks that could impact the productivity of your supply chain. Create a plan that supports a flexible and agile network, regardless of circumstances and unexpected events.
- Conduct an assessment that maps out your suppliers and their suppliers. The goal is to gain visibility of your Tier 1 and Tier 2 suppliers and to know their locations, which provides a better grasp of region-specific risks that could impact supply availability.
- Continuously monitor your supply chain. Make sure that you are monitoring the risks associated with both your Tier 1 and Tier 2 suppliers to ensure your company has a complete view of your supply chain.
- Identify alternative suppliers for urgently needed goods in higher-risk regions. Determine how long it would take to onboard them and how quickly they could deliver to your location. Will it be faster than waiting for shipments from your original supplier, depending on the type of disruptive event that might occur?
- Invest in data and analytics. Today’s supply chain leaders are challenged by disparate systems and dispersed data. Making technology investments today allows companies to better manage supply chain risk — giving them greater transparency into their entire supplier network, while also serving up the data and insight needed to make informed decisions, particularly during unexpected events.
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