When it comes to international logistics, political stability is a crucial determinant for most international business supply chains to thrive. It ensures that all facets of the supply chain remain smoothly running, minimizes the risk of unforeseen disruptions, and sees to it that all supply chain processes are operating at a good and normal rate. Unfortunately, while political stability is immensely sought after by various aspects of the economy, global supply chains included, that doesn’t mean that sudden political unrest may not flare up unforeseen and throw regular operations into an unfavourable state.
According to the CIA, political instability occurs when there is a potential for sudden and significant change in a nation’s leadership, policies, or condition. This may be caused by burgeoning political tensions, terrorism, and/or civil unrest and strikes among others, which may instil widespread instability in both the nation’s inner workings and policies as well as it’s international relations. When a nation enters a state of political unrest from any of these happenings, international businesses with supply chains in the said nation are therefore impacted in often negative ways. Even certified BV supply chain services in Malaysia like Altus Malaysia services and Altus Malaysia supply chain services may have difficulty operating smoothly within countries rocked by political tensions. Furthermore, with disruptions in one aspect of the supply chain working it’s way up the rest of the chain, this can create some truly detrimental effects not just for the part of the supply chain in the politically-unstable nation, but the entire supply chain and therefore business as a whole.
As such, it is important for most businesses to be adaptable and flexible in times of these sorts of crises, and to understand how political instability may affect their international supply chains. Here are some common problems faced by international supply chains in times of political unrest:
Supply Chain Delays
If a business has an offshore base for any part of the supply chain which – unfortunately – is situated in a country suffering political unrest, then this can have incredibly negative effects on the entire supply chain as a whole. As mentioned previously, one part of the supply chain being disrupted by external factors (i.e. political instability) can have a chain-reaction effect on the rest of the chain, causing said negative impact to ripple outwards into the entire business and it’s supply operations.
So in times of political unrest, if the offshore supply base was, for example, responsible for the delivery and supply of the raw product, delivery times may become severely disrupted and delayed due to instabilities of the political climate. For example, if certain strikes are occurring, supply trucks may have to be forcibly rerouted from their usual route, and there may even be cases of employees leaving work in favour of joining said strikes and therefore delaying certain operations. When delivery of supplies becomes delayed, production will receive the supplies later and therefore also be delayed in the manufacture of the product, which in turn will delay subsequent operations further down the supply chain. This can result in the product as a whole becoming late to ship and late to reach customers, which may have certain detrimental effects on the overall business.
Higher Turnover Rates
Another possibility that may arise in times of political unrest may be higher turnover rates from bases within the supply chain. Again, if a supply chain base is located in a country suffering current political unrest, this can often have a negative effect on the mood, stress, and psychological wellbeing of certain employees working within said country. For example, a country rocked by recent terrorism would instil higher stress and fear levels in its population and therefore the employees working within it, making it difficult for employees to fully concentrate on their work and therefore sparking higher turnover rates within the supply chain.
Higher employee turnover rates in a certain part of the supply chain, again, can have a ripple effect to the rest of the supply chain – for example, lower attendances and staff in a manufacturing plant may negatively affect the quality of the product, and therefore the business may have to spend additional time and resources fixing said quality or risk shipping low-quality products to their customers.
