Supply Chain Management

Global inflationary pressures

Electrical steel – Used primarily in electric motors: +15-20 % inflation

Electric motors are instrumental across many vertical process and discrete markets. Some common use cases include propulsion for large cargo ships, pipeline transportation for oil & natural gas and variety of compression applications. The electric motor and the systems they drive account for more than 50% of global electricity consumption. Electric steel, which is one of the more critical components for these motors, has an increasingly global supply chain. Some 88% of electrical steel production is concentrated in Greater China, Japan, and South Korea whereby Russian and Ukrainian coal is still the primary input for production.

Rare-earth materials: ++ 60% increased Nickel, Copper, lithium & others

China’s dominance in clean energy manufacturing is the biggest risk to global net-zero goals as ultimately the transition away from fossil fuels will require the availability of a wide range of raw materials. With supply chain disruptions still a major pain point for global manufactures there will inevitably be a large dependency on resources from mainland China particularly impacting wind and solar technology.

Food & beverages: Shortage of nitrogen-based fertilizers from Russia

While the inflationary costs for food & beverage are unclear, rises in the cost of food is equal to that of the GFC in 2008. It is estimated that 12% of the worlds calories come from Russia and Ukraine (the worlds 5th largest exporter of wheat). The immediate impact of the Russia invasion of Ukraine is that the world will experience a 10-50% shortage of major grain products (Corn, Rape seed, barley, what and sunflower oil). Specific countries and regions within the Middle East and Africa are especially suffering as many of these countries rely up to 100% on imports from Russia and Ukraine. Best case, global food markets can expect an impact of 6-9 months before rectifying steady food and beverage supplies. Even with the utility of sanctions, inflation will not return to normality for 2-3 years.

Smarter warehouse and logistics

Robotic installations: The barometer for smart factories and warehouses

Global robotic installations can be regarded as the best indicator of the growth of automation solutions in factories and warehouses of the future. Automation has been a solution used by many manufacturers throughout the pandemic to offset the impact of labour shortages and disrupted supply chains. Robotic installations have continued to grow strongly to 435,000 units in 2021 (up 13% on 2020). The biggest emerging trend for robotics will be the further implementation of collaborative systems to help support demand in logistic track and trace applications.