Hormuz underscores the need to reinvent global supply chains
The blockade of the Strait of Hormuz has once again exposed the vulnerability of global supply chains to geopolitical disruption. Yet, the incident in the Middle East is than a short-term crisis – it is the latest sign of a fundamental shift in the operating environment for supply chains, writes Yves Guillo, a leader at EFESO Management Consultants.
The perception of a broadly stable world, which underpinned the architecture of logistics networks for nearly four decades, has collapsed. While the Covid-19 pandemic was the first major shock, it was followed by a relentless succession of geopolitical, climatic, and cybersecurity disruptions that accelerated the transition into an era of permanent uncertainty.
The transformation is profound. Logistics, which underpins the global economy, can no longer rely on incremental improvements to a model designed primarily around fluidity and cost optimization. Instead, it must undergo a fundamental redesign that acknowledges instability as a permanent feature of the operating environment.
The Strait of Hormuz disruption is therefore not an isolated event, but another indication that the traditional supply chain model is reaching the end of its usefulness. The rise of China, changing geopolitical alliances, tensions over Taiwan, the conflict in Ukraine, and increasingly severe climate events are creating a world in which volatility has become the norm. Supply chains must be designed to operate successfully within this reality.
Reinventing supply chain logistics
With freight rates capable of increasing by more than 120%, protecting industrial margins increasingly depends on optimizing transportation networks. The objective is to make every shipment profitable by maximizing load factors and aligning transport costs with the value of the goods being moved.
One practical response is the adoption of ‘slow logistics’. By easing the flow of goods, carriers can consolidate shipments more effectively, potentially generating transport cost savings of up to 20%. The emphasis shifts away from constant reactivity and toward longer-term planning.
Companies must also reduce fragmented shipments. In an environment of elevated freight costs, underutilized transport capacity is increasingly difficult to justify. Transport pooling offers another opportunity. Through partnerships with local players, organizations can group shipments, improve vehicle utilization rates, and revise delivery frequencies to enhance overall efficiency.
Product portfolios should also be reviewed. Through rigorous segmentation of customers and products, companies can focus resources on high-value references while reassessing the role and handling of low-turnover items. This reduces unnecessary transport activity and maximizes volumes for strategically important products.
Inventory management: From just-in-time to targeted resilience
For decades, the Just-in-Time model served as a cornerstone of operational efficiency. Today, however, it has become a significant source of vulnerability. The solution is not excessive stockpiling, which creates unsustainable financial burdens, but rather a more intelligent and targeted approach to inventory management.
Targeted safety stocks represent one important strategy. Resilience does not require blanket increases in inventory levels, but rather a careful focus on the materials and products that are genuinely critical to business continuity.
Multisourcing is another essential capability. By diversifying supply sources, companies can reduce their dependence on individual suppliers or geographic regions. Unlike large-scale reshoring initiatives, multisourcing is often a realistic option for organizations of all sizes, including SME businesses.
Rerouting strategies are equally important. Companies should identify vulnerable supply routes, establish alternative transportation options, and develop relationships with additional logistics providers. This allows them to switch rapidly from one route to another when disruptions occur.
The ecosystem becomes the competitive advantage
The most significant transformation lies in shifting the focus of optimization. The era of isolated, company-centric optimization is coming to an end. Future competitiveness will depend on the strength and resilience of the entire ecosystem, including suppliers, customers, logistics providers, and other partners.
Achieving this requires greater data sharing across the network. Common protocols and platforms must enable the secure exchange of information between ecosystem participants. While concerns around data sovereignty and industrial security remain significant, overcoming these barriers is becoming a prerequisite for success.
This evolution will also drive the development of ecosystem-wide control centers capable of integrating information from across the supply chain. Supported by artificial intelligence, these control towers will provide end-to-end visibility and support more effective decision-making.
Artificial intelligence itself will play an increasingly critical role. By processing vast amounts of data, AI can identify weak signals, anticipate the spread of disruptive events, and model their impact across complex value chains long before problems become visible.
Looking toward 2035, supply chains are likely to become shorter and more regionally focused as the era of "happy globalization" gives way to a world increasingly organized around major economic blocs. Relocation and regionalization within these blocs will require much deeper levels of integration and coordination among supply chain participants.
The skills needed
As supply chains evolve, so too must the professionals responsible for managing them.
The foundation remains a deep understanding of supply chain management itself. Beyond technical expertise, leaders must understand the strategic role supply chains play and how they interact with every business function, from production and procurement to sales and finance.
Crisis management and decision-making under uncertainty will become equally important. Supply chain leaders must be capable of operating under pressure, remaining calm, and making decisions without complete information – an increasingly common reality in a volatile world.
Strategic vision and communication skills are also becoming essential. As supply chains move closer to the center of corporate strategy, leaders must be able to articulate a clear vision and secure support at the highest levels of the organization.
Finally, mastery of emerging technologies is no longer optional. Digitalization, artificial intelligence, and advanced analytics are becoming integral to supply chain performance. Organizations must embrace these technologies with confidence and develop the capabilities required to extract value from them.
Conclusion
The companies that successfully transition to an ecosystem-based model built on data sharing, AI, and resilient supply networks will emerge as the leaders of the next decade. Those that fail to adapt risk being left behind as the supply chain enters a fundamentally new era.
