Survey: top supply chain risk of 2023 is semiconductor shortage

One of the biggest supply chain risks of 2023 is a worsening of the global semiconductor shortage, according to a survey of manufacturing industry professionals conducted by Hubs, a Netherlands-based, online platform for custom part manufacturing.

The survey defined five supply chains risks to watch out for in 2023, led by concerns that escalating tensions between China and Taiwan could trigger a military conflict in the region, destabilizing Asia. That scenario could have serious consequences for global supply chains, since Taiwan is a leading producer of semiconductor chips, and disruptions to its production capability could impede the production of smartphones, computers, vehicles, and electronic appliances, according to Hubs’ “Supply chain resilience report 2023,” a survey conducted by Hubs in November 2022 with 334 respondents.  

The rest of the top five risks for 2023 included: no swift solution in sight for port congestion; inflation can disrupt supply chains by causing uncertainty in demand; surge of COVID cases in China may hamper manufacturing capabilities; and new carbon emission regulations may lead to slower movement of goods.

Those looming threats follow a year of supply chain troubles for many organizations. The Hub survey found that 76.6% of companies experienced some form of external disruption to their supply chain over the past year. The top cause of that disruption was material shortages (60.9%), followed by COVID-19 (57%) and transportation/logistics issue (52%). The rest of the list included: rising energy costs, container shortages, port congestion, natural disasters, and trade wars. 

Part of the troubles resulted from a general corporate trend to pursue short term profit over long term stability, Hub said. “Traditionally, profit incentives have favored lean manufacturing models, or just-in-time manufacturing (JIT). While this approach has proven to reduce costs in the short term and boost efficiency, its vulnerabilities have become increasingly evident in the face of global crises, such as the pandemic and war in Ukraine,” the report’s authors said.

In response to that pressure, 70.1% of companies took measures in 2022 to build up their supply chain resilience, the survey showed. For example, 43.7% of companies believe increasing local sourcing will help strengthen their supply chains in 2023.

“Where lean supply chains fail, resilient supply chains can adapt, ultimately decreasing the impacts of disruptions and keeping things up and running,” the report found. “A resilient supply chain is prepared for unforeseen disruptions, able to react and recover fast, and emerge stronger after the event. Though many companies believe supply chain resilience merely implies the ability to manage risk, true resilience enables you to deal with and even benefit from disruptions.” 

The report concluded by naming five key strategies to mitigate disruptions: creating autonomy; developing flexibility; geographical diversification; agile internal processes; and supply chain monitoring.