Supply chain problems require supply chain solutions
As the conflict enters Day 45, what initially appeared to be a short-term disruption has evolved into a prolonged crisis reshaping global trade, energy flows and supply chain stability.
Escalating tensions in the Middle East—particularly around the Strait of Hormuz—are no longer just a geopolitical risk, but a structural supply chain disruption.
Even if the Strait of Hormuz stabilizes in the coming months, the damage has already been done.
Supply chains—across Association of Southeast Asian Nations (Asean)—have been severely disrupted, and recovery will not be immediate.
The region will continue to face delayed shipments, elevated costs and constrained supply. The aftershocks of this crisis are expected to persist well beyond the resolution of the conflict itself.
This crisis is driving oil prices and other commodities and services volatility, constraining production and forcing organizations and governments to operate under sustained uncertainty.
This is no longer a risk to monitor, but a disruption that must be actively managed.
Worse than the COVID-19 supply chain crisis
Escalating tensions are disrupting already fragile supply chains, with the Strait of Hormuz at the center.
Asia remains highly exposed due to energy dependence, while manufacturing, logistics and semiconductors face rising risks—further intensified by hidden dependencies on critical materials, like helium, bromine and sulfur.
The COVID-19 pandemic exposed how fragile global and national supply chains truly are and how critical procurement, logistics and coordinated response systems are in ensuring continuity during crises.
As early as November 2020, I have consistently advocated for a national supply chain strategy directed towards:
- Energy
- Food resilience
- Health security
- Defense readiness
Increasing Challenges: The worse is yet to come
Global supply chains are now facing multilayered disruption:
- Business disruption and employment impact
- Systemic, interconnected supply chain risks
- Energy and trade disruption
- Supply-demand imbalance
- Cascading cost pressures
- Asia’s structural supply vulnerability
Supply chain response framework
As risks shift from volatility to structural disruption, both public and private sectors must adopt a stage-based response aligned to impact levels.
◆ Stage 1 (Preemptive and monitoring) – Start of conflict to March 31, 2026
Assess vulnerabilities, identify critical dependencies, prioritize essential SKUs and begin scenario planning and energy-efficiency measures.
◆ Stage 2 (Active management) – April to June 2026
Intensify demand management, diversify suppliers and leverage artificial intelligence (AI) for supplier discovery, cost simulations and real-time visibility. Implement Integrated Supply Chain Planning and Execution for alignment and faster decision-making.
◆ Stage 3 (Emergency resilience) – July to December 2026
Focus on continuity through demand control, alternative sourcing, supply allocation, contingency activation and close stakeholder coordination.
Industries already affected
- Agriculture
- Logistics and transportation
- Manufacturing and semiconductors
- Retail (nonessential, luxury segments)
The bullwhip effect
It occurs when small demand changes create larger disruptions across the supply chain. In this crisis, it is causing:
- Inventory imbalances
- Inefficient production
- Rising operational costs
What the private sector can do
◆ Bring key stakeholders together – Define strategy and coordinated actions.
◆ Map supply chain vulnerabilities – Supply chain mapping must go beyond direct suppliers and extend across multiple echelons (Tiers 1 to 3) assess risks supply availability.
◆ Strengthen S&OP / Integrated Business Planning – Align demand and supply through scenario simulations linked to financial outcomes and optimize inventory positioning.
◆ Assess supply base risk –Evaluate supplier capacity, continuity and risk exposure for critical materials across upstream and downstream demand.
◆ Validate cost and pricing – Stress-test cost of goods sold and pricing, prioritize high-margin and essential items and phase out low-performing products.
◆ Drive strategic sourcing, group procurement and AI use – Diversify suppliers, optimize costs, secure continuity and leverage AI for data extraction and sourcing models.
- Simulate demand and optimize costs – Model demand scenarios and optimize operations using three-level planning:
- Operational
- Tactical
- Management
◆ Augmentation and out-tasking – Leverage external partners for supply chain, procurement and logistics capabilities.
What the public sector can do
◆ Establish a national supply chain organization that is functionally aligned – Create an interagency council for data-driven decisions and coordinated execution focusing on energy, food security, healthcare and national defense and security.
◆ Supply chain mapping critical commodities – Map basic necessities and strategic commodities including fuel, food, health care and defense materials.
◆ Implement demand sensing, planning and management – Use real-time monitoring to anticipate shortages and demand shifts.
◆ Establish a national supply management plan – Expand sourcing, substitute materials, analyze lead times, build stockpiles and enable emergency production.
◆ Mobilize whole-of-government coordination – Align agencies, local government units (LGUs) and industry using multilevel planning:
- Operational – Families and communities
- Tactical – LGUs
- Strategic – National level
◆ Collaborate across Asia – Asean countries share resources, synergies and stopgaps.
◆ Institutionalize public-private partnerships – Develop structured collaboration with supply chain organizations and solution providers.
◆ Leverage AI across operations – Use AI for predictive analytics, scenario modeling, monitoring and cost analysis.
From crisis to control
The current crisis marks a turning point—where supply chain disruption is no longer temporary, but structural to global trade, economic stability and national security.
Use this crisis as an opportunity to learn that supply chains are lifelines, requiring a shift from efficiency to resilience and from reactive to strategic management.
Even if this conflict does not escalate further, the imperative remains: to be prepared, to strengthen our supply chains and to build resilience against future shocks.
Preparedness is no longer optional—it is essential.
In this new reality, the ability to sustain supply is the ability to sustain survival.
The author is a member of the Management Association of the Philippines (MAP) Trade, Investments and Tourism Committee, and MAP International Relations Committee. He is chair of the Procurement and Supply Institute of Asia (PASIA) and PASIA Shared Services. He currently serves as a senior supply chain advisor under the US Department of State LEAP Program. Feedback at map@map.org.ph and charlie.villasenor@transprocure.com
