Global Businesses Lose 5% Revenue to Supply Chain Disruptions, But Remain Unprepared to Respond

A new survey of 152 executives, conducted by Supply Chain Dive's studioID and DP World, reveals 82% of supply chain leaders see geopolitical risk as a major threat, costing 5% of revenue, yet half admit they are 'unprepared' to respond.

Geopolitical fluctuations have become one of the top threats to supply chain resilience, alongside natural disasters and the lingering impacts of the COVID-19 pandemic. From shifting trade policies and tariffs to rising political tensions and regulatory unpredictability, these forces are upending global operations and driving up costs.

This volatility is forcing supply chain managers back to the drawing board, as they discover that traditional risk mitigation strategies are no longer sufficient to combat the unique challenges of geopolitical disruption.

The Price of Disruption

Supply chain disruptions come with measurable financial consequences. A new survey of 152 executives, conducted by Supply Chain Dive's studioID and DP World, found that over the past three years, their companies have lost an average of 5% of revenue due to supply chain disruptions. Other estimates place the financial cost of disruption even higher, at 6-10% of annual revenue.

“Five percent is a pretty sizable percent of revenue, and that signals the need for action,” said Brittany Caskey, chief commercial officer – logistics for DP World Americas.

Clearly, geopolitical disruption is no longer a periodic shock – it is a persistent and escalating threat. More than four in five (82%) respondents said geopolitical events pose a moderate to significant risk to their supply chains, and 78% expect that risk to increase over the next two years.

The Gap Between Awareness and Action

The survey also pointed to two surprising findings:

1. Half of the respondents are only "somewhat prepared" to cope with the impacts of geopolitical disruption.

2. Some of the highest-performing strategies for dealing with geopolitical disruption are the least adopted – even though they are relatively simple to implement.

To build resilience against strong geopolitical headwinds, it is critical to better understand the sources of disruption and prioritize risk mitigation strategies that protect revenue and reputation.

The greatest impacts of geopolitical disruption are manifesting as volatility in raw material prices (36%), increased transportation costs (36%), and disruptions in access to key suppliers and markets (33%).

“Look at how the tariff announcement impacted Wall Street and stock prices,” Caskey said. “Companies have to start thinking about stock buyback programs, pension funding shortfalls. Just uttering the words of potential geopolitical disruptions can materially change the financial status of a company without the company even doing anything. That’s scary.”

Which Strategies Actually Work?

The data shows that traditional mitigation tactics – while familiar – are not always the most effective. To date, companies tend to fall back on familiar solutions:

• Increasing collaboration with supply chain partners (49%)

• Diversifying suppliers for geopolitical/location advantage (47%)

• Dedicating more resources to supply chain risk management (37%)

But compare that to the top strategies that respondents admitted were actually very or extremely successful in mitigating geopolitical risk:

• Moving or adding internal operations to a location for geopolitical advantage (73%)

• Elevating policy/regulatory compliance to the board level (67%)

• Increasing investment and/or operations to influence policy decisions (66%)

• Seeking more data on suppliers' political risks (66%)

Many of these underutilized strategies can be implemented fairly quickly and easily. The best way forward may be to combine both traditional and underutilized strategies to better navigate disruption.

A Smarter Approach: Building an Ecosystem

Resilience doesn’t just depend on internal readiness; it also depends on the strength and flexibility of the ecosystem. The survey showed 89% of respondents view a supplier's approach to geopolitical risk management as playing a significant role in their selection process. In fact, 78% have added or switched supply chain providers due to a geopolitical advantage in location (e.g., to avoid tariffs or sanctions).

By aligning leadership, strategy, and ecosystem partners around geopolitical risk readiness, supply chains can move from a state of vulnerability to being "future-ready."

“It really comes down to physical infrastructure, systemic infrastructure, agility, being prepared, but also already having options ready to go,” Caskey concluded.

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