A recent analysis conducted by Interos, an artificial intelligence-powered supply chain risk management platform, highlighted the “extensive and debilitating” scope of global supply chain disruptions on U.S. and European companies resulting from Russia’s invasion of Ukraine.
More than 2,100 U.S.-based companies and 1,200 European companies have at least one direct (Tier 1) supplier in Russia, and more than 450 U.S. companies and 200 European companies have Tier 1 suppliers in Ukraine, according to data from the Interos platform.
The proportion of U.S. and European supply chains that include Tier 1 Russian or Ukrainian suppliers is “relatively low,” according to Interos. However, exposure increases “substantially” regarding indirect relationships with Tier 2 and Tier 3 suppliers.
“More than 190,000 firms in the United States and 109,000 firms in Europe have Russian or Ukrainian suppliers at Tier 3,” Interos stated. “More than 15,100 firms in the United States and 8,200 European firms have Tier 2 suppliers based in Ukraine.”
Software and IT services account for 13 percent of supplier relationships between U.S. and Russian/Ukrainian companies, according to the research. Consumer services (7 percent), trading and distribution services (6 percent), and industrial machinery (4 percent) were each also noted.
The four major areas of concern relevant to the global supply chain are commodity price increases and supply availability; export controls and sanctions; cybersecurity collateral damage; and wider geopolitical instability, according to Interos.
Risk mitigation strategies: Supply chain compliance officers and information security leaders of U.S. and European companies “should review their dependence on Russian and Ukrainian suppliers at multiple tiers,” Interos stated. “This is a key first step in assessing risk exposure in the region and ensuring operational resilience.”
Risk mitigation strategies should include “evaluating required levels of inventory and labor in the short to medium term; discussing business continuity plans with key suppliers; and preparing to switch to, or qualify, alternative sources for essential products and services,” Interos stated.