Six key facets of current global supply chain strain

Supply chain issues are affecting the world in an unprecedented way. On its website, fmglobal.com, commercial property insurer and supply chain resilience expert FM Global identified six facets of the current supply chain crisis that exemplify threats to business resilience.

1. The COVID-19 pandemic has disrupted demand and product supply. FM Global takeaway: Although the pandemic triggered supply chain problems, there are other contributors that are not going away.
2. The supply chain is susceptible to cyberattacks, such as the one on the Colonial Pipeline that disrupted U.S. fuel supply. FM Global takeaway: Cybercrime has become big business, making cybersecurity a key part of business strategy.
3. Port backlog is an issue as goods have accumulated faster than workers can move them, with an estimated $24 billion of goods sitting outside of California ports. FM Global takeaway: There are no assurances backlogs and elevated shipping costs will not continue through the middle of next year or longer.
4. Many countries lack enough truck drivers to move the goods that are backlogged in ports and other locations. FM Global takeaway: The truck driver shortage will strengthen the case for autonomous-vehicle development and lowering the interstate truck-driving age.
5. Deadly floods have destroyed communities, severed railway links and disrupted manufacturing in China and Europe. FM Global takeaway: Although no single weather event can be conclusively attributed to a changing climate, flooding is a well-documented effect of warming temperatures and a growing risk to business.
6. A chip shortage has occurred as the pandemic closed factories and triggered a surge in technology demand, affecting auto, gaming, smartphone and medical device manufacturing, among many other industries. FM Global takeaway: Chip booms and busts have been common during technology’s history and likely will recur in the future.

In May, FM Global released its 2021 FM Global Resilience Index, which is designed to help organizations optimize their supply chains by providing data regarding the relative resilience of countries’ and territories’ business environments.