18 Jun 2024, 13:21
Julian Wettengel

German businesses worried about global supply chain security – survey

Clean Energy Wire / Handelsblatt

Companies in Germany continue to be worried about global supply chain security, but many still have a positive outlook for the future, shows a survey by consultancy Deloitte that was commissioned by industry association BDI. Almost half of respondents in the survey of 128 businesses said they expected the situation to improve in the coming years, while about one third expected it to deteriorate. Eighty-three percent of respondents agreed with the statement "global supply chains are becoming less and less secure and companies have to accept a higher residual risks and lower margins." In view of the global challenges, companies must always have a contingency plan in their supply chain, for example when it comes to procurement, Deloitte partner Jürgen Sandau told business daily Handelsblatt. "But redundancies always cost money." These funds would then be lacking for future investments.

Sourcing from countries that are geopolitical allies would become more important, about 80 percent of companies said, with many also pinning their hopes on circular economy concepts to play an increasing role. "This can reduce dependence on raw material supplies," said Sandau. Forty-three percent of companies believe that circularity has the potential to reduce raw material costs and thus partially prevent relocations. In the survey, about three quarters of respondents also agreed with the statements that Germany was an overall good business location, but that it was losing political stability.

As energy transition technologies, such as renewable power installations or e-cars, become more widespread and fully enter mass production, supply chain security has shifted into the focus of analysts. A global trend towards non-fossil energy systems could greatly intensify competition for key resources needed to manufacture more sustainable products, and observers have warned that better environmental and social standards, as well as circular economy approaches to many critical raw materials, are needed to avoid taking the same kind of risks as with the supply of fossil energy sources.

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