A networked supply chain that can be tracked in real time is considered particularly promising. Climate change, political conflicts and the coronavirus crisis have led to a massive destabilization of supply chains worldwide in recent years. Numerous ports have been closed due to the pandemic, while container ships are still jammed in others. According to the Kiel Institute, congestion in the North Sea and declining freight volumes in the Red Sea, the most important trade route between Europe and Asia, are particularly problematic for trade in Europe. As a result, suppliers in numerous industries are suffering from ongoing supply bottlenecks for raw materials and preliminary products. There were already bottlenecks before the pandemic - including due to the trade war between the USA and China and the blockade of the Suez Canal for days due to a damaged freighter. However, the current crisis is not comparable in scale.

This is because Russia's war against Ukraine has exacerbated the situation many times over. In addition to the as yet unforeseeable consequences of the energy crisis and the destroyed infrastructure in Ukrainian ports, the sanctions against Russia are also having an increasing impact on the international flow of goods. In addition, some of the train connections between China and Europe that cross Russian territory have been suspended.

Germany is particularly affected by the supply bottlenecks, as many medium-sized companies here specialize in the final assembly of products. The focus here is on high-quality end products and high-tech construction segments, for which most of the preliminary products are needed. An exemplary sector for this is plant and mechanical engineering or the automotive sector.

No end in sight to the chip crisis

The past two years have been characterized above all by a shortage of chips, which are being integrated into more and more products and largely come from China. The market researchers at Gartner expect "that the bottlenecks in components will gradually ease and prices will stabilize due to the improved inventory situation." So far, however, this only applies to computer and cell phone production. In many sectors, above all the automotive industry, the demand for semiconductors is still higher than the supply.

Against this backdrop, it can be assumed that German SMEs will be confronted with persistent supply bottlenecks for the foreseeable future. This means that one of the key challenges in this context is to identify effective levers that can be used to stabilize supply chains that have become fragile:

• Diversification of supply chains to reduce dependence on other countries. The coronavirus pandemic and the war in Ukraine have triggered a decline in globalization. Trade with Russia has now largely ceased. However, many companies from Germany and other Western countries are also limiting their business with other countries with which political relations are tense - such as China. The trend is towards "friendshoring", i.e. trading exclusively with companies from friendly countries. According to a survey by the DIHK, more than half of companies in Germany (54%) are planning to adapt their supply chains or have already done so. Almost three quarters of them are looking for new or additional suppliers. And a third are planning to shorten or change transport routes in order to save costs. However, these options in turn lead to higher unit costs, as production is more expensive almost everywhere than in Asia.
  
  
• Implementation of real-time traceable, networked supply chains: According to an IDC study, almost all companies are currently working on improving the transparency of their supply chain and thus making it more traceable. This not only helps to meet compliance requirements, but also international standards for quality control. In this way, companies receive all relevant material data for a finished product - from production to distribution - and can use this data to cover the entire supply chain and thus also map it transparently: internally for the receipt of raw materials for production, externally for the distribution of finished products and their delivery to their final destination. In this way, a transparent supply chain ensures product quality, reduces inefficiencies and prevents recalls.
  
  
• Use of blockchain and automation of data transfer: With technological levers such as these, the exchange between suppliers and manufacturers can be improved, as intermediary entities are no longer required to exchange information. This increases data transparency and also makes it possible to track the life cycle of components - from design, production and inspection through to shipping and assembly.
  
  
• Inclusion of external information: Often, the stability of supply chains also depends on external factors. Weather conditions in certain regions can often determine whether a delivery arrives on time or is delayed. The same applies to the question of whether there will be pandemic-related restrictions and thus delays in the handling of goods in logistically important ports, aviation hubs or freight transshipment points. Here, the integration of external data - for example from the WHO on the subject of corona or from the DWD on the weather outlook - can be helpful in order to gain more transparency about whether there may be disruptions in the supply chain in the short or medium term.

Christoph Stoica, Managing Director of the Central European national companies at Sage, comments: "Inflation, the energy crisis, the war in Ukraine - the markets have not been this volatile for decades. This naturally has a negative impact on the stability of supply chains and planning security for companies. In view of this situation, it is therefore of central importance that decision-makers can make their operational decisions on a solid basis that includes both real and potential uncertainty and risk factors. To do this, they need meaningful data sets that make the processes in the supply chain transparent. Digital control and tracking of supply chains is therefore a decisive success factor against this backdrop. In this respect, digitalization can also make an important contribution in this area so that companies remain capable of making decisions and thus taking action."