• Current risk levels in the supply chains of GCC countries need to be mitigated, especially for high criticality products such as transformers and critical minerals 
  • Disruptions in the industrial sector, which is an enabler for several other vital sectors, can have a domino effect on the economy. Mitigating such disruptions is essential

Dubai – Oliver Wyman, a global management consulting firm and a business of Marsh McLennan (NYSE: MMC), has highlighted the need for greater supply chain resilience in the GCC to safeguard largescale industrial development, in a new report titled Industrial Supply Chain Resilience: GCC Preparedness Amid Global Disruptions.

Vulnerabilities in global supply chains came under greater scrutiny in recent years following COVID-19 and numerous climate-change induced natural disasters, in addition to cybersecurity threats, logistics challenges, geopolitics and conflicts.

The industrial sector is an enabler for other industries, and so disruptions in the industrial sector have a domino effect that can amplify vulnerabilities in vital sectors that are important for health, safety, and security.

Globally, the concentration of resources and manufacturing activities in specific countries, combined with the internationally integrated nature of most industrial supply chains, means that issues in one region can rapidly impact the flow of goods around the world. For example, in terms of critical minerals, Congo supplies 68% of the world’s cobalt and Chile 23% of global copper, while China is dominant across all 17 rare earth elements (REEs), representing 70% of global supply.

As a result, disruptions to supply chains present a particular challenge in the Kingdom of Saudi Arabia and the United Arab Emirates, which are embarking on large-scale industrial development – entailing initiatives that are heavily dependent on key inputs. The potential issues lie in numerous areas, including access to machinery and components such as transformers and desalination equipment, and critical metals and minerals. In many cases, the supply of items that are vital to the functioning of numerous sectors already face supply constraints. For example, of all electrical machinery and equipment imported to KSA and the UAE, 60% and 65% respectively is imported from just three countries. Similarly, for excavation machinery and valves, KSA and the UAE import 50% and 55% respectively total from three nations.

“As GCC countries scale up their economic diversification plans, including their industrial sectors, it is vital that they redouble initiatives to increase supply chain resilience to ensure the smooth functioning of all sectors and aspects of society in the event of unexpected upheavals in the supply chain,” said Frederic Ozeir, Partner and Head of Automotive and Manufacturing Industries IMEA at Oliver Wyman.

Several GCC countries have already initiated efforts to boost supply chain resilience. In 2022, KSA launched the Global Supply Chain Resilience Initiative to position the Kingdom as a location of choice for leading global industrial companies and attract investments in supply chains. Meanwhile, the UAE is focusing on improving food supply chains through programs that support local food production, and by establishing new logistics hubs and deploying technological solutions.

In addition to these efforts, the report recommends five key actions for GCC countries to further enhance supply chain resilience, including: developing a supply chain resilience strategy that integrates with the industrialization agenda; creating a collaborative governance framework; leveraging the private sector as a partner; building supply chain resilience capabilities, and encouraging technology adoption through advanced manufacturing policies.

“Achieving supply chain resilience in the industrial sector is not a one-size-fits-all endeavor. The levers deployed to fortify supply chains, such as localization, shoring, and partnerships, must be applied to the supply chain components of products with high criticality and risk. By embracing a more holistic approach to supply chain resilience, GCC countries could safeguard their national industrial growth amid an ever-shifting global landscape,” Ozeir said.

The full report can be accessed here: LINK

About Oliver Wyman

Oliver Wyman is a global leader in management consulting. With offices in more than 70 cities across 30 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm has more than 6,000 professionals around the world who work with clients to optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a business of Marsh McLennan [NYSE: MMC].  

For more information, visit www.oliverwyman.com. Follow Oliver Wyman on Twitter @OliverWyman.