By clicking the “I Accept” button, or by accessing, participating, or submitting any information, or using the Jabil Global Intelligence Portal or any of its associated software, you warrant that you are duly authorized to accept the Global Intelligence Portal Terms and Conditions on behalf of your Company, intending to be legally bound hereby, and your company shall be bound by the terms and provisions of the Global Intelligence Portal Terms and Conditions, accessible under the following link Portal T&Cs.
Global Category Intelligence
Q2 2025
Global Category Intelligence
Q2 2025
POV: How Geopolitical Risks are Shaping Indirect Procurement Strategies
As geopolitical tensions mount, global supply chains and indirect procurement strategies are increasingly vulnerable to disruptions. Recent escalations, from U.S.-China trade frictions to rising conflicts in the Middle East, have strained the flow of goods and services, leading to higher costs and necessitating strategic shifts in procurement.
Three recent events underscore the magnitude of these challenges for indirect procurement professionals:
U.S. Semiconductor Export Restrictions on China
The US Department of Commerce has implemented stringent controls on exporting semiconductors and related technology to China, particularly those with potential military applications. These restrictions are intended to hinder China's advancement in artificial intelligence and advanced computing capabilities.
These new export controls affect indirect procurement for IT infrastructure, cloud services, hardware, and electronics by disrupting supply chains for key technology components. The US regulations affect advanced semiconductor technology exports to China, especially AI-related chips and chip-making equipment. They will also likely impact IT infrastructure, cloud services, and electronics sourcing strategies.
Recommendations:
One key recommendation to protect yourself from the negative impacts of the new, stricter rules is to expand the number of suppliers you rely on.
- Consider moving production closer to home to reduce shipping time and gain more control over the process.
- Stay abreast of global events that could impact the supply chain will help you avoid potential disruptions.
Israel-Hamas Conflict and Oil Price Impacts
The ongoing conflict between Israel and Hamas has recently heightened concerns about the increasing instability in the Middle East, particularly regarding crucial oil supply routes such as the Strait of Hormuz.
This volatility impacts indirect fuel, energy, and logistics procurement, increasing transportation and energy-related operations costs. Companies reliant on fuel and energy for logistics and operations face higher expenses and supply uncertainties.
Recommendations:
- Diversifying energy sources and suppliers can help reduce dependency on any single region or supplier, minimizing the risk of disruptions. Establishing relationships with multiple suppliers and exploring alternative energy options, such as renewable energy sources, can provide more stability and flexibility.
- Investing in technology and data analytics can also improve visibility across the supply chain, allowing for more proactive decision-making.
- Fostering strong communication and collaboration with suppliers and logistics partners can ensure a more coordinated response to disruptions, helping maintain operations continuity.
Russia-Ukraine War and Ongoing Sanctions
The Russia-Ukraine war and the ongoing sanctions have significantly impacted indirect procurement for energy commodities, MRO, and logistics services. New sanctions on Russia, particularly those targeting energy exports, have altered global trade flows and increased costs in European and international markets.
This month, the UK announced its largest sanctions, aimed at the “shadow fleet”—groups of tankers Russia uses to sell oil. Under these new sanctions, the number of ships prohibited from docking in UK ports or using British maritime services is now up to 43. The Kyiv School of Economics reports that the volume of Russian oil exported is about 4.1 million barrels daily.
The increasingly intense situation has forced European businesses to seek alternative sources of energy commodities and key raw materials, complicating procurement processes. Additionally, the sanctions have disrupted logistics and transportation routes in the region, leading to increased costs and delays, further straining procurement operations.
Recommendations:
To mitigate these challenges, indirect procurement and supply chain professionals should consider several strategies:
- Diversifying suppliers and sourcing from different regions can reduce dependency on any single source and mitigate risks associated with sanctions.
- Strengthening relationships with existing suppliers and exploring long-term contracts can provide more stability. Investing in technology to enhance supply chain visibility and improve risk management practices is also crucial.
- Additionally, developing contingency plans and maintaining a flexible approach to procurement can help navigate the uncertainties and ensure continuity in operations.
Staying attuned to global dynamics is an important part of understanding the implications of geopolitical risks. It enables better cost management and maintains continuity in the supply chain.
Back to Top