Energy supplies remain today the most critical factor on a short and mid-term basis to keep on the radar, mainly in Europe and the US. Increasing energy supply prices are causing cutbacks and reshuffling the production of light and heavy industries affecting global business continuity. This fact intensifies the market inflation impact for countries depending on energy supplies while the crucial Russian – Ukrainian war is laying down severe implications across the European continent specifically.
On the other hand, the Energy proposed cap models that various European governments recently promoted to tackle the supply shortage and the increase in prices does not create the expected relief; however, they introduce a heterogeneous cost landscape to adapt with.
Supply chain leaders, in this respect, must act dynamically with the highest resilience and wise decision-making. The cornerstones for such adaptation to the energy crisis’ headwinds are to consider the following:
– Securing adequate safety stocks to secure critical products’ continuity.
– Establishing 2nd sources overseas with the necessity to involve in “Tier 2” and “Tier 3” suppliers’ selection.
– Increasing awareness about suppliers’ specific conditions in capacity and delivery reliability.
– Renegotiating material prices in the direction of Asian markets is currently tempting; however, wise decisions in this respect between short-term savings and long-term resilience must be considered.
On a parallel track, supply chain leaders must carefully approach the risk deriving from market inflation which is likely to spill over into unexpected increases in wages and living essentials, notably in the US and Europe, wherein it might transform from a temporary to more permanent inflation.
This whole scenario of today’s global situation shall position the Kingdom of Saudi Arabia at a perfect momentum as an energy producer and core leading power in sustaining global market energy prices while achieving deserved profits through its wise energy management strategy. Moreover, this will open vast opportunities for the Kingdom to expand its resources’ footprint and proceed toward significant transformation in its supply chains from a sole energy producer into a hub of diversified products and services manufacturing boosting its localization initiatives while contributing to increasing global market demands. By that, the Kingdom of Saudi Arabia would be on the right track according to the set objectives of its ambitious 2030 vision.