**Vienna**: The disruptions caused by the pandemic have revealed significant vulnerabilities in global supply chains, prompting experts to call for diversified production strategies and initiatives like the European Chips Act to enhance industry resilience and sustainability in Europe.
The ongoing discourse surrounding supply chain dynamics has been sharply illuminated by the disruptions experienced during the corona pandemic, which laid bare the vulnerabilities inherent in global networks. Notably, the situation has prompted experts like Peter Klimek, director of the Supply Chain Intelligence Institute Austria (ASCII), to delve deeper into the complexities of supply chain management, particularly concerning supplier relationships.
The pandemic triggered significant consequences, such as empty supermarket shelves, extended wait times for deliveries, and dramatic price increases. Klimek describes this period as a “unique event,” indicative of what he terms “supply chain pressure,” which has reached “unprecedented heights.” The implications of this pressure extend to all aspects of a supply chain, which comprises various stages essential for product delivery, from sourcing raw materials to logistics and final distribution to consumers.
Among the most affected sectors was the automotive industry, where production lines experienced halts primarily due to semiconductor shortages. Klimek notes that the supply chain surrounding semiconductors is especially intricate and relies heavily on regions like Taiwan and China. While Europe accounts for roughly 20 percent of the global chip usage, its production capabilities are limited, with only about ten percent of chips being manufactured within the continent. This dependency was starkly highlighted during the pandemic, exposing the potential risks associated with a limited manufacturing footprint.
Disruptions were not merely confined to electronics; the impact was widespread, affecting food supply chains as well. Klimek explained that a lack of truck drivers able to navigate cross-border restrictions led to specific food items being unavailable, while unexpected supply shortages of packaging materials, such as yogurt lids, hindered the sale of numerous products. Even the pharmaceutical sector faced challenges due to disruptions in medication packaging materials.
The severity of the crisis in supply chain management is reinforced by the findings from the Austrian Supply Chain Index, which tracks the pressures affecting supply chains through various metrics such as transport costs and business expectations, akin to a traffic light system. This index soared to nearly seven points in November 2021, placing it squarely in the red zone, compared to a less concerning value of minus 0.26 points during the initial phases of the crisis in March 2020.
In response to the demand for enhanced supply chain sustainability, numerous initiatives at the EU level have emerged. The “European Chips Act” aims to elevate Europe’s global chip production share to 20 percent by 2030, while the “Critical Raw Materials Act” seeks to mitigate the EU’s reliance on essential raw materials. These measures intend to simplify the approval processes for mining projects and access financing, thereby enhancing the resilience of European supply chains.
However, Klimek stresses that establishing robust production capabilities in Europe is not a panacea. “Production in Europe by itself is not a unicorn,” he asserted, indicating that a full return to self-sufficiency may not be feasible. He advocates for a diversified approach, suggesting that dependencies must be distributed across various regions to foster stability. Despite the lessons learned from the pandemic, Klimek concludes that Europe remains vulnerable to similar crises in the future, as the underlying challenges in global supply networks persist.
Source: Noah Wire Services
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