The entire world is concerned for the people of Ukraine in the wake of the Russian invasion. Nonetheless, manufacturers also have to be proactive about potential supply chain disruption stemming from world events, and this is no exception.
Gas prices
Before considering any other possible supply chain effects, we have to acknowledge that gas prices have soared and will probably continue to do so. Oil went to $100 a barrel almost as soon as Russian tanks reached Ukraine.
The price of fuel will affect every product that includes transportation in its upstream supply chain. European nations rely on Russia for natural gas and the United States generally doesn’t — but does your industry rely on Europe?
Rising energy costs are expected to lead to further inflation across the board. Electricity can require oil or gas, too.
Other exports
Ukraine exports wheat, corn, manganese, iron ore and coal. Ukraine and Russia together grow one quarter of the world’s wheat. Limitations, whether disruption of the next harvest by war or of supply because transport is threatened, could destabilize the global wheat market and drive up prices of wheat from other nations as well.
Considering that wheat prices already zoomed up by 80% during the pandemic, this could have a real influence on world hunger.
With extreme weather and the ongoing disruptions of the pandemic, this is a true concern.
Ukraine also provides 90% of the world’s neon, a raw material for semiconductor chips.Shortages and supply chain problems with chips have slowed productivity in the auto industry and elsewhere. This problem will get worse before it gets better.
Cybersecurity
While shortages and cost spikes are predictable, many in manufacturing are also worrying about cybersecurity. Russia has shown itself to be aggressive with cyberattacks, and experts are worrying that this form of aggression could spill over into the cloud-based tools many manufacturers use.
Food inflation and shocking prices at the gas pump are almost certain. But the consequences of cybercrime in American supply chains that might result from the invasion are unclear and largely unpredictable.
The best option right now is to make sure you have a high level of transparency and awareness all along your supply chain. A sudden discovery that your cybersecurity services originate in the Ukraine would not be desirable.
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