It’s that time of year again! If you haven’t downloaded it already, Ardent Partners recently released its Procurement 2023: BIG Trends and Predictions report. Don’t miss the next report, register for exclusive access to Ardent’s research by clicking the image below.
Procurement 2023: BIG Trends and Predictions is an annual report published each January by Ardent Partners.
Each year, Ardent Partners identifies the “BIG trends” that emerge from its recent research that we believe will impact procurement that year. Ardent also makes a series of predictions based upon those trends that are intended to help Chief Procurement Officers, sourcing executives, category managers, and other procurement staffers focus on the important issues facing the profession in 2023. These findings culminate in our Procurement 2023: BIG trends and Predictions report. Today we share some of our thoughts on Geopolitical Turmoil.
BIG Trend: Geopolitical Turmoil is Impacting Most Markets
Three years ago Ardent Partners proclaimed global supply risk to be at a 20-year high. The report was timely and correct. Unfortunately, risk has only continued to increase since then. Today’s global business environment is fraught with geopolitical risk and uncertainty that has been snowballing for many years.
The current headline, of course, is Russia’s invasion of Ukraine, which is Europe’s largest armed conflict since World War II. This war has disrupted supply chains, placed great stress on energy markets, and caused a host of complications for those Western companies operating in and doing business with Russia. While a business’ location and that of its suppliers has largely determined the level of disruption this conflict has caused, the majority of this report’s readers have been directly impacted. The combination of Russian sanctions, blocked Ukrainian ports, and the inability of Ukrainian farmers to work has created regional food shortages and big commodity price increases. Global energy prices skyrocketed in no small part due to this conflict. Russia Ukraine is the major example of geopolitical strife, but it is far from the only one. Before that discussion… a specific prediction about Russia and its actions in 2023.
Prediction: Putin’s War Expands Globally and Asymmetrically
Putin’s invasion of Ukraine, regardless of its rationality or purpose, is also a proxy war with NATO. Russia’s inability to win quickly and its ongoing struggles, have placed Putin in a corner. The result is that Russia is now shifting from traditional global power to “rogue nation.” As Putin becomes more embattled and isolated, Ardent Partners predicts that he will begin to stir serious trouble in other ways and in other parts of the world.
By nature, Putin is unpredictable, so exactly what he will do is uncertain, but he could “double-down” in Syria and work to make it a satellite state. This would have regional and global sourcing implications. A more obvious action relates to cyber-terrorism. Russia is a cyber-superpower with a serious arsenal of cyber-tools and hackers capable of disruptive and potentially destructive cyber-attacks. It would not be surprising to see Putin direct attacks against Western businesses, countries, political systems, trade routes, and general infrastructure projects. Russia’s post-invasion attacks have been primarily focused on Ukraine, with some spillover effects including the disruption of European satellite communication. The longer the war continues, the greater chance that cyberattacks expand against NATO allies.
Prediction: Multiple Economies Will Bog Down in the Face of Political Conflict and Violence
Russia has been the major catalyst of political destabilization in recent times, but they are not alone. In many ways, the United States has played an equally big role, particularly within its sphere of influence. A sphere of influence typically refers to an area or region in which a particular country exerts significant economic, political, or military influence.
For centuries, the US has been a “beacon on the hill” for countries seeking democracy and free markets. In the aftermath of the January 6 insurrection, the opposite may be true, as many autocrats and bad actors in different regions have provoked their political allies into political violence.
Political violence has entered the mainstream in the U.S. and many other countries over the past few years. The net effect of these demonstrations, uprisings, and coup attempts is weakened political and economic systems. Brazil, Italy, France, Germany, Sri Lanka, Peru, and Ecuador have all seen violent protests that hamper policies and programs that create wealth and stability. Ardent believes these actions will continue to spread globally throughout 2023 with destabilizing economic effects.
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