Pakistan is at the brink of war with its hegemonic neighbour. While the probability of full-scale war seems low, it is the fear of war & destruction that has gripped the economy in a state of turmoil. In times like these, a supply manager might ask what possible risks could arise from such a situation. It is very possible that one might not have taken risk of war as seriously as it may seem now. Data collected by SCM shows 1,409 supply chain professionals around the world put the risk of ‘war, terrorism or other geopolitical issues’ very low on the list of worries. Ranked by the percentage declaring them “very concerned”, the threat of war was 12th of 13 separate risks considered in the survey, below things like counterfeit products and natural.
“Without fighting the culminating art of war is to defeat the enemy”
However, this risk is probably on top of everyone’s list right now. In the current situation when the threat of war is very high a good supply chain manager needs to rethink his strategy and to forecast problems so that the problem could be handled head on.
In such high-tension scenario, markets behave in a negative manner. Stock prices fall, in some cases, markets might come crashing down. Hence the risk of financial losses. Critical suppliers or customers may end up being bankrupt.
Banking systems are disrupted in such situation as well, with markets already sinking, the currency PKR is at the risk of further devaluation. If this happens the cost of buying raw materials from foreign suppliers may increase, hence the need to find a local supplier for the short term.
When media outlets are crying about war everywhere. Pakistan’s foreign policy issues are being highlighted and major powers are questioning Pakistan’s ability to secure terror threats. There is enough for suppliers or customers to be concerned about the security of goods. Hence supply managers need to re-evaluate their shipping strategy and contracts. Shipping intermediaries need to be provided with enough value to keep on logistical efforts because in such high-risk environment shipping companies also stop their haul.
High threat of war increases the demand for certain goods immensely or decreases them altogether. Hence supply chain managers need to look out for such goods and possible changes in demand. Stocking up on such supplies beforehand could benefit the chain for short term needs as there is a high chance that suppliers might sell all stock on hand to some other competitor and close down for a short time. Shortage of some materials is common in supply chain problems but a critical supplier may downright stop their supply in Pakistan until the situation cools down. Moreover, Pakistan’s largest logistical companies are under the control of the Armed forces. With all their attention on securing borders, logistical activities are also concentrated near borders. Especially in case of C-PEC related projects, the logistical resources have been allocated elsewhere. Hence the need to look out for local shipping companies for short term logistics.
Supplies were disrupted immensely for items hauled by air freight as air space of Pakistan was closed down. Flights were rerouted and slowly things started turning in the right direction. This is a common occurrence in such dire times. Hence re-scheduling or re-routing supplies through other means must be looked upon.
War brings out the best in people or sometimes the worse. A good supply manager needs to be ready for the worse. Riots and angry mobs are a common occurrence in Pakistan. Events like these hinder timelines and pose a serious risk of damaging or robbing goods.
In Pakistan most like other countries that have ports, the biggest chunk of exports or imports passes through ports. In previous wars, Indian forces were able to lock down Pakistan’s ports and there is a chance of this happening again as well. Hence the supply managers need to evaluate how much of their supplies are hauled by ships. Finding other means to securely send supplies or receive them would help.
Recently Pakistan’s government has been very unpredictable as major policy shifts have been seen in the very short term. So supply managers need to keep an eye out for other policy changes in the current scenario as well. Those exporting to or importing from India must be high alert as governments on both sides have stopped the trade of some goods which might escalate.
This might seem impossible to some, but war seems unlikely to many as well, but there are people on both sides and people behave irrationally in war times. Hence hate speeches and emotional backlashes are very possible. For those allying to each side, this sort of behavior must be expected to some extent and supply managers need to be ready to tackle this situation.
As above mentioned risks are somewhat likely to occur, supply chain managers need to re-evaluate their situation and take matters into the hand as soon as possible. Even if war doesn’t happen it’s the risk of an outbreak of war that cannot be ignored. Supply chain managers need to evaluate high-risk areas, find new logistical resources and alternate routes. In such a hard time unity and discipline are needed and managers need to bring everyone together. This risk may become a crisis for those who are not ready but may unearth new opportunities and form new alliances.