Supply chain experts share their perspective on the effects of the war in Ukraine

Three leading procurement, supply chain and cybersecurity figures share their insights into the complex effects of the war in Ukraine on supply chains

Dawn Tiura is President and CEO of Sourcing Industry Group (GIS), a membership association for sourcing and outsourcing professionals.

MOST people don’t realize how intertwined and complex global supply chains are. Russia’s invasion of Ukraine isolated entire regions – entire countries – that depended on Ukrainian products. Moreover, the resulting sanctions against Russia have fractured supply chains that depended on minerals and raw materials that only Russia has.

For example, Russia is the world’s largest supplier of nickel and the largest supplier of pallidum, both of which are components needed to manufacture semiconductors – a supply chain that was already experiencing shortages.

The world is at risk of a production stoppage. If Russia stops exporting critical minerals and raw materials, the manufacturing industry will be in dire straits. Sanctions against Russia could also cut off the United States and Europe from access to oil and platinum, which will seriously disrupt global energy supplies.

The airspace ban has had a huge impact on cargo transportation. President Biden recently announced a crackdown on ocean freight carriers charging inflationary prices, ironic timing, as the airspace ban will likely drive ocean freight prices higher than ever.

With air freight being forced to travel many extra miles to avoid the ban on Russian airspace, air and sea transport will become significantly more expensive – and this extra cost will be passed on to consumers.

Alain Holland is CEO and Founder of Keelvar, an intelligent procurement automation provider for procurement teams. He is a former lecturer in AI at University College Cork

The Russian invasion sends shocks through the global supply chain. The invasion worsens the shortage of semiconductor chips. Ukraine is one of the main producers of neon gas, an essential substance used in the manufacture of computer chips.

In order to avoid the fiasco of 2014 – when Russia annexed Crimea and neon gas prices rose 600% – the White House is urging chipmakers to source from alternative suppliers.

But diversification will not be easy. Neon gas comes almost exclusively from Russia and Ukraine, with these two countries producing half of all semiconductor-grade neon.

Businesses unable to handle sudden change and disruption are sure to be dragged into chaos.

Bob Maley is CSO of black kite a company specializing in third-party monitoring of cyber risks. He was previously responsible for PayPal’s Global Third-Party Security & Inspections team.

Expect to see an increase in cyberattacks as Russia’s invasion of Ukraine intensifies. These attacks will extend beyond Russia and Ukraine – geographic distance does not guarantee a company’s security.

Russia could retaliate against the United States and other countries for the sanctions they have imposed. Criminals will also use the crisis to their advantage and actively seek opportunities to take advantage of the global chaos.

The supply chain is a particularly vulnerable area. Recently, Toyota suspended domestic plant operations because a supplier was hit by a cyberattack after Japan joined its Western allies. While it’s unclear if the attack was related, one thing is certain: the hackers seized the opportunity to infiltrate a key third party in a global organization’s supply chain. We expect attacks like this to increase in the coming weeks.

Like most things in the supply chain, you are only as strong as your weakest link. To avoid major disruptions, supply chain and IT managers need to monitor the cyber health of third parties 24/7. Without accurate insight into a provider’s susceptibility to ransomware, you could be the next to be attacked.

Technology can help quantify risk in your supply base, describe its potential impact on your business, and formulate a plan for proactive mitigation.

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About Bob C. Zoller

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