For decades, companies in the Middle East have embraced globalization and lean supply chain operations to meet more demanding customer expectations while bringing down costs and reducing inventory. But the inherent weakness and vulnerability of this model has been exposed by a decade of supply chain disruptions that grew in frequency and magnitude. Natural disasters, weather events, labor shortages, trade disputes, and other geopolitical issues showed the cracks in global supply chains. Then, over the past two years, several aspects such as the devastating Covid-19 pandemic and the global semiconductor shortage, made this vulnerability obvious to every business leader—and moved supply chain resilience to the top of the C-level agenda.
The worst of these supply disruptions have taken significant bites out of regional companies’ output, sales, profitability, and share prices, with recovery sometimes taking months or even years. The chip shortage, for example, is estimated to have curbed global automotive production by more than 7 million vehicles in 2021, and the industry, similar to others, has yet to fully recover. Most of these disruptions understandably caught leadership teams by surprise. But the result is that they’re now constantly on edge, awaiting the next unforeseen disruption lurking around the corner.
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