McKinsey & Company
By Knut Alicke and Tacy Foster with Vera Trautwein – October 14, 2024
When it comes to supply chain resilience, have companies taken their eyes off the ball?
Supply chain disruptions keep on coming. From missile attacks on commercial shipping in the Red Sea to automotive production delays following floods in Europe, global supply chains continue to experience instability. Meanwhile, trade tensions are choking the movement of semiconductor products, manufacturing equipment, and critical materials.
The latest McKinsey Global Supply Chain Leader Survey suggests that problems like these remain the norm, not the exception, with nine in ten respondents saying they have encountered supply chain challenges in 2024 (see sidebar, “About the research”). More worryingly, there are signs that, when it comes to supply chain resilience, companies are taking their foot off the gas. The survey results identify considerable gaps in the ability of organizations to identify and mitigate supply chain risks, with few new initiatives aimed at addressing those weaknesses.
The biggest gap could be the one at the top of the organization. Few surveyed supply chain executives believe that their boards have an in-depth understanding of supply chain risk. Only a quarter have formal processes in place to discuss supply chain issues at board level. All this could leave companies dangerously exposed to future disruptions.
A brief history of turbulent times
Since 2020, McKinsey has conducted annual surveys of supply chain leaders to ask about the performance of their supply chains, the impact of volatility and disruption on their supply chains, and their efforts to manage those challenges. The surveys occurred during a period of unprecedented supply chain turbulence that included the COVID-19 pandemic and its aftermath. This environment pushed supply chains to the top of the agenda, as companies took action to keep their businesses running in difficult conditions.
Those actions were initially rapid, tactical changes, with a focus on larger inventories and buffer stocks.