Risks beyond the pandemic abound — political, economic, environmental, financial and more.
“If 2023 was the year of ‘what’ in terms of what the problem is or what the challenge is, in 2024 we’re going to start getting into the hows and then doing it,” said the executive vice president at procurement services firm Proxima. “I think we’re going to see quite a lot of progress on localization, reshoring and resilience in the early part of 2024.”
Despite the scars of the pandemic, the sharp swing from high demand and product scarcity to overabundance of inventory and weak spending has renewed longstanding priorities around cost and profit margins.
“Currently, there is a strong focus on cost management and cost insulation to protect profitability. Most companies try to avoid a holistic transformation of their supply chains,” said the managing director of FTI Consulting.
At the same time, FTI Consultancy thinks attitudes have changed in organizations since the pandemic brought widespread disruptions to supply chains.
“From my point of view, there is a mind shift,” FTI Consultancy said, noting that since the pandemic “people concluded that the supply chain is one of their strategic forces and that they need to secure it. The pendulum is going more in the direction of cost, but still, there is a mindset of resilience.”
And there is cause for a resilience-mentality. Circumstances and systemic challenges continued to put pressure on supplies of some key commodities, while other hard-to-predict risks could create shortages no one can foresee with perfect accuracy today.
Here is a look at where shortages might strike in 2024:
Pharmaceuticals and medical supplies
Shortages of certain medicines continued to plague hospitals and providers through 2023, and many of the underlying dynamics have not been resolved.
The Food & Drug Administration still lists shortages for some cancer treatments such as carboplatin and cisplatin — which have caused astronomical price spikes. Those are in addition to dozens of other medicines in short supply.
Stocks of some medical machinery have also been under strain. Supply disruptions for both devices and treatments have caused surgical cases to be rescheduled, postponed or canceled, according to a 2023 survey by the patient safety nonprofit ECRI and the Institute for Safe Medication Practices.
In the medical device space, many of the supply chain issues are upstream from manufacturers.
“When I’m working with medical device companies — with nine out of 10 — the question is: ‘How do I increase the stability of supply for my suppliers,’” said a senior managing director in FTI’s life science practice. “You cannot switch suppliers that easily and quickly in the medical device space.”
Supply disruptions can be exacerbated by the long lead times in manufacturing supply chains for both medicines and devices, FTI noted. Mitigating those risks also takes time. Finding and onboarding another qualified supplier can take at least a year, FTI added.
Given the time it takes to bring in new suppliers, assessing and addressing risk early can potentially head off disruptions. FTI pointed to a European medical device company to conduct a full risk assessment on its supply.
“We found out that most of these risks could be eliminated by either changing contracts or by identifying alternative suppliers,” FTI said.
War and weather have put the broader food system on alert, where it may remain for the foreseeable future.
“I don’t think it’s possible to go into any year at the moment without having a food supply at the top of your risk register,” Proxima said.
Analytics firm Everstream listed agricultural commodity shortages as one of its top supply chain risks in 2024, citing in part production halts in 2023 during a turbulent year for crops.
Last year has brought spiking cocoa and sugar prices, the latter of which spurred a federal government watchdog agency to push for policy changes. Heat and drought in Europe created shortages of olive oil that drove prices up globally.
Going into 2023, concerns swirled around potential shortages as war raged between two large grain-producing countries — Ukraine and Russia. Ukraine’s exports fell in 2023, and farmers in the country have abandoned millions of acres of land. So far, though, the worst has not come to pass.
“While lower exports of agricultural commodities from Ukraine continue to contribute to tighter and more volatile global markets, trends in Ukrainian exports are becoming less and less important to overall expectations for global commodity markets, as supply chains and the global market have largely adapted,” the Famine Early Warning Systems Network said in an October analysis.
“Rather, greater concern exists for the impacts of future potential shocks,” the organization added, pointing to the potential of war in the Middle East.