GCC countries need to show greater supply chain resilience to safeguard largescale industrial development, says a report by Oliver Wyman, a global management consulting firm. 

 

The report titled Industrial Supply Chain Resilience: GCC Preparedness Amid Global Disruptions says several GCC countries have already initiated efforts to boost supply chain resilience. In 2022, KSA launched the Global Supply Chain Resilience Initiative to position the kingdom as a location of choice for leading global industrial companies and attract investments in supply chains. 

 

Meanwhile, the UAE is focusing on improving food supply chains through programs that support local food production, and by establishing new logistics hubs and deploying technological solutions.

 

Five key actions

In addition to these efforts, the report recommends five key actions for GCC countries to further enhance supply chain resilience, including: developing a supply chain resilience strategy that integrates with the industrialisation agenda; creating a collaborative governance framework; leveraging the private sector as a partner; building supply chain resilience capabilities, and encouraging technology adoption through advanced manufacturing policies.

 

“As GCC countries scale up their economic diversification plans, including their industrial sectors, it is vital that they redouble initiatives to increase supply chain resilience to ensure the smooth functioning of all sectors and aspects of society in the event of unexpected upheavals in the supply chain,” said Frederic Ozeir, Partner and Head of Automotive and Manufacturing Industries IMEA at Oliver Wyman.

 

“Achieving supply chain resilience in the industrial sector is not a one-size-fits-all endeavor. The levers deployed to fortify supply chains, such as localisation, shoring, and partnerships, must be applied to the supply chain components of products with high criticality and risk. By embracing a more holistic approach to supply chain resilience, GCC countries could safeguard their national industrial growth amid an ever-shifting global landscape,” Ozeir said.

 

Enabler for other industries

Vulnerabilities in global supply chains came under greater scrutiny in recent years following Covid-19 and numerous climate-change induced natural disasters, in addition to cybersecurity threats, logistics challenges, geopolitics and conflicts. 

 

The industrial sector is an enabler for other industries, and so, disruptions in the industrial sector have a domino effect that can amplify vulnerabilities in vital sectors that are important for health, safety, and security.

 

Globally, the concentration of resources and manufacturing activities in specific countries, combined with the internationally integrated nature of most industrial supply chains, means that issues in one region can rapidly impact the flow of goods around the world. For example, in terms of critical minerals, Congo supplies 68% of the world’s cobalt and Chile 23% of global copper, while China is dominant across all 17 rare earth elements (REEs), representing 70% of global supply. 

 

Disruptions

As a result, disruptions to supply chains present a particular challenge in Saudi Arabia and the UAE, which are embarking on large-scale industrial development – entailing initiatives that are heavily dependent on key inputs. The potential issues lie in numerous areas, including access to machinery and components such as transformers and desalination equipment, and critical metals and minerals. 

 

In many cases, the supply of items that are vital to the functioning of numerous sectors already face supply constraints. For example, of all electrical machinery and equipment imported to KSA and the UAE, 60% and 65% respectively is imported from just three countries. Similarly, for excavation machinery and valves, KSA and the UAE import 50% and 55% respectively total from three nations.--TradeArabia News Service