Threats of global supply chain shocks intensify: CEOs' willingness to invest in resilience rises.

Event Overview

Proxima (a Bain & Company subsidiary) released the "Global Supply Chain Resilience Outlook" report, based on a survey of over 500 CEOs from companies with annual revenues exceeding $500 million in the UK, US, Australia, Singapore, and Germany. The results show that the global supply chain faces multiple shock threats, and corporate executives' emphasis on resilience building has reached a new high.

Supply Chain Background

The current global supply chain is in a period of high uncertainty. Geopolitical conflicts, trade protectionism, extreme weather events, emerging technology shocks, and evolving regulatory requirements collectively constitute the supply chain risk landscape. The survey indicates that 17%-22% of the surveyed CEOs respectively consider conflicts and geopolitical tensions, emerging technologies, sustainability targets and regulations, climate change and extreme weather, and protectionist policies as the biggest sources of financial challenges.

Corporate Decision Logic

Corporate decision-makers are shifting from reactive responses to proactive investment in resilience. Over half (51%) of CEOs acknowledge that if a major supply chain shock occurred tomorrow, their company could not maintain daily operations for more than three weeks without experiencing some form of disruption. This vulnerability drives CEOs to pay for resilience: 72% of respondents said they would accept more than a 10% increase in third-party supplier costs in exchange for supply chain resilience guarantees, with the average acceptable increase reaching 17.3%.

How to raise funds? 38% of CEOs plan through cost-cutting measures, 35% will pass costs on to customers (price increases), and 26% will absorb costs by compressing profit margins.

Supply Chain Impacts

• Supplier Management: 56% of CEOs said that if their top three suppliers were disrupted for two weeks, 11%-20% of revenue would be at risk; nearly a quarter (24%) believe the risk could reach 21%-40% of revenue. This highlights the vulnerability caused by key supplier concentration.
• Procurement Costs: Companies are willing to pay an average premium of 17.3% for resilience, which will push up overall procurement costs and may be passed along the supply chain to end consumers.
• Inventory Levels: Although there are no direct data, to cope with disruptions, companies may tend to increase safety stock and alter lean inventory strategies.
• Digitalization and AI: 51% of respondents said AI has delivered measurable value in supplier risk monitoring. However, further expansion of AI applications faces obstacles: data quality (38%), skills shortage (30%), and unclear ROI (29%). Notably, 78% of respondents believe there is internal tension between adopting rapidly evolving technologies like AI and adhering to business compliance practices.
• Cyber Risk: 45% of surveyed companies have experienced supply chain disruptions caused by cyber incidents in the past two years, but only 35% have real-time visibility into cyber risks, indicating a significant gap in cybersecurity monitoring.

Regional ImpactThe five markets surveyed (UK, US, Australia, Singapore, and Germany) are all developed economies, but the conclusions have global relevance. - North America: US companies face risks from tariff policy changes and trade protectionism. CEOs' willingness to invest in resilience will drive nearshoring and friend-shoring trends. - Europe: Germany, as a manufacturing hub, is particularly sensitive to supply chain disruptions; post-Brexit supply chain adjustments in the UK are ongoing. European companies also face stringent ESG regulatory requirements, increasing compliance costs. - Asia-Pacific: Australia and Singapore, as trade hubs, are highly dependent on global logistics networks; geopolitical tensions may directly affect their supply chain stability. - Other Regions: Although not directly surveyed, developing economies, as key links in the global supply chain, will feel the spillover effects of rising resilience costs and procurement strategy adjustments.