May 2026 - the Middle East and global supply chains.

 The closure of the Straits of Hormuz has been going on longer than expected.  (well, longer than I expected - but I didn't expect the situation to arise, so what do I know?)

The New Normal  which looks at the petrochemicals industries is warning that things COULD get a lot, lot worse before they get better.

We are just at the point where buffer stocks are running down.  But even it everything opened up tomorrow it may till take 6 months or more to get back to normal.

That means at least 6 months of higher prices for fuel and chemicals (and hence everything), shortages and disruptions.

Good procurement professionals have been looking at their options a matter of course, but just at the moment the shift from Lean supply chains to Resilient supply chains seems essential.  IF you can, of course.

Which is why we get a package for our trip to Malta, so that if flights were cancelled because of a lack of aviation fuel our holiday company was responsible for our accommodation  (we saw what happened when the volcano in Iceland stopped flights over Europe and we had to stay in Egypt for an extra week - those who booked independently had to fend for themselves).  Yes there is insurance, but who wants to have to go through that process when they are on holiday?

And there is much greater interest in alternatives to fossil fuels - but that transition will take time and money.  This shock might just be the trigger though.

Meanwhile, we are seeing decreases in students from the Gulf coming to the UK for procurement training courses... just to show that the immediate and obvious impacts are not the only ones.

So, one last Malta photo (obvs we got there and back with no problems).  (yes they have Red phone boxes, and post boxes).

Middle East Conflict - 3 weeks in (or more)

 There are definitely going to be people who say that the conflict in the Middle East has been going on for longer than 3 weeks.  

Some will say since 9/11.

Some will say since 1953 when the elected Iranian government was overthrown.

Some will say since 1919 and the "Peace to end Peace" and Sykes-Picot.

Some will say since Homeric times and the war against Troy... (Just listened to the Penelopiad by Margaret Atwood - very good).

And of course this by no means the only conflict in the world today - some "hot" wars and some less so.

So my question, is "why do we keep thinking that things will return to normal after this crisis"?

One thing we can see is that there is usually another, different crisis within a decade.  (and of course some crises are ones that just re-ignited).

So from a procurement point of view, we should not just assume that everything will be all right in the end.  Maybe it will.  But then there will be something else.

So how do we prepare and plan for this.

Lean supply chains and Just In Time have huge benefits, but are easily disrupted by global incidents.  Resilient or Agile supply chains are typically more expensive, but more robust.

I think the key thing is not to abandon your strategic approach (whichever it is) but to have in place contingency plans and options for when the next thing(s) come over the horizon.

And it will.

(but to be more optimistic, and we shall survive it, pretty much no matter what it is).

Supply Chain disruption

 Brilliant article in the FT about the supply chain disruptions in the ICT chip manufacturing process.

Sadly, with no easy answers - apart from national (or even regional) self-reliance is not going to work.

Which many politicians will not want to hear (in many countries).

Quite a few business leaders seem very reluctant to hear that things are (necessarily) complicated and will remain so.  In particular in my old stomping ground (the chemicals industry) people find it difficult to process that the usual economic rules do not always apply.  Just because something is profitable and in demand does not mean that competitors will come into the market.  If a profitable product ceases production (e.g. as a result of an industrial incident) it does not follow that other businesses will make it (or that the original manufacturer will build a replacement plant).  There are complexities about risk, availability, production processes, regulations etc. that all need to be understood.  But if you are a customer you are likely to think "well why aren't they doing it?".

Good procurement personnel need to know and understand these complexities (obviously not at granular detail) in order to fully understand the supply chain risks.

In the pre-covid and pre-Brexit times when things were working smoothly, Lean supply chains seemed to be the answer.  At the moment we are all considering Resilient supply chains.  But nothing is ever quite simple, and neither approach is simply good or bad.

Interesting times ahead

Possible future course on Re-starting supply chains.

We are already running some courses online, and probably about to start re-working some for the middle east market.  Looking at the courses made me wonder if there might be interest in a new course....

When things do start getting back to "normal", it will not be like flicking a switch.  A lot will have changed in the supply market, and particularly in the demand market.  Supply chains take a lot of work to make them Efficient, i.e. Lean.  Which means that they will not be Resilient.  So, our lovely smooth Lean supply chains are going to splutter into life rather than spring back perfectly formed.  There will be lots of blockages, broken links and delays.
Some businesses will be out of business - others will have changed their mode of operation.
Should we still buy from China?  Or should we develop local suppliers (who may be more expensive at first).
What did our contracts say about Force Majeure and what should they say for the future?

If you think there would be interest in such as course, please do let me know.  I am particularly interested in what you think should be covered, and whether we can do it in 1 day or will need 2.

Take care of you and yours.