Navigating Complexity: How the 'Poly-Crisis' is Transforming Supply Chain Strategies

A recent publication by supply chain consultancy Inverto reveals that a “poly-crisis”—characterized by escalating procurement expenses, geopolitical tensions, supply chain disruptions, and climate change—is prompting 87% of businesses to rethink their supply chains in the next five years.

The survey involved 260 managers and employees from various sectors. It found that over half (57%) reported experiencing shortages in supplies last year. additionally, 55% noted important impacts due to rising procurement costs, while 33% flagged increasing energy prices as a major concern. Climate-related events like floods and wildfires disrupted operations for about 23% of respondents.

“Companies are grappling with multiple overlapping crises,” stated Lina Tilley, principal at Inverto London. “This has laid bare the vulnerabilities within their supply chains.”

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The geopolitical landscape adds another layer of complexity; around 20% of businesses pointed to economic challenges stemming from U.S.-trade partner tensions. Simultaneously occurring, conflicts such as Russia’s invasion of Ukraine (16%) and ongoing Middle Eastern disputes (15%) are also causing concern. In response, many companies are reworking their strategies: 33% aim for regional supplier diversification; 31% prioritize nearshoring; while nearly three in ten prefer “local for local” sourcing—producing goods close to where they’re sold—and about a quarter plan on reducing supplier tiers.

To mitigate procurement risks, almost four out of ten companies regularly evaluate suppliers. Additionally, around 36% employ dual or multiple sourcing strategies and about one-third engage in safety stock practices to counteract shortages. However, Inverto’s findings suggest that most firms remain reactive rather than proactive regarding risk management; only 45% utilize artificial intelligence tools for identifying vulnerabilities within their supply chains.

“Procurement departments can no longer treat this aspect as an afterthought,” Tilley emphasized. “It’s now essential for all category strategies.” This shift highlights the growing importance of strategic planning in navigating today’s complex business habitat.