Two-thirds of food and beverage industry C-suite and operational leaders say they are confident or very confident in mitigating the impact of geopolitical risks in their supply chains over the next five years.
However, the findings from Argon & Co’s survey of over 600 executives are worrying, says the strategy and transformation consultancy in its first Operational Outlook report.
“There is a worrying disconnect in supply chain risk perception,” says the report.
Operational resilience weak
Businesses need to strengthen operational resilience, especially as geopolitical volatility is growing around powers including the US, China, Russia and the Middle East.
Food and drink is considered an industry with complex supply chains that can face serious disruption, especially from the likes of tariffs, says the report.
F&B in brief
- 60% of F&B firms reported experiencing severe or substantial disruption to their supply chains over the past year. This compares to 55% across all sectors
- 56% of C-suite leaders in the F&B industry are confident or very confident that they can effectively mitigate the impact of geopolitical risks on their supply chain over the next five years. This compares to 66% across all sectors
- 20% in the F&B sector cited geopolitical uncertainty as a major challenge impacting their operations over the last 12 months
A lack of major disruptions over the last year, compared with the previous five, has “fostered a complacency” among C-suite heads. Only a quarter of those asked cited geopolitical uncertainty as a major challenging impacting operations over the coming year.
“There is a real danger present that operations leaders are overestimating their ability to withstand geopolitical risks – especially as we see tariffs being slapped on worldwide, regional conflicts intensifying, and disruption to major trade routes," said Argon & Co managing partner, Ben Wright.
Competing priorities
“C-suite leaders cannot bury their heads in the sand – just surviving the previous issues doesn’t mean they can deal with these ones. Adopting a ‘resilience by design’ approach – like alternative sourcing models or relocating logistics hubs – will be crucial to shore up their defences. If Plan A fails, leaders must have Plans B, C, and D in place and ready to execute."
As well as an oversight on the impacts of geopolitical uncertainty C-suite leaders also struggled to balance competing priorities in managing disruption.
For example, 55% of those asked reported experiencing severe or substantial disruption in their supply chains in the last 12 months, with inflation, labour shortages and tech advancements at the heart.
Over a third (34%) said they were prepared to meet Scope 3 requirements and 49% struggled to keep pace with technological advancements like AI and automation.
