Q&A: Mateja Matko, Senior Industry Consultant at Hexagon
Election results seen throughout 2024 have confirmed two major trends: political outcomes are increasingly difficult to predict and, due to increased polarisation, consequences can be far-reaching.
Faced with the threat of instability, challenges to globalisation and supply chain disruptions, industrial players seeking new ways to adapt.
With more political uncertainty on the horizon and industries considering how to navigate the modern-day business landscape, Mateja Matko, Senior Industry Consultant at Hexagon Asset Lifecycle Intelligence, tells Supply Chain Digital how companies can bolster their supply chains.
What challenges are industrial companies facing in today’s politically uncertain climate?
Several factors make the current landscape particularly challenging for industrial organisations.
First, geopolitical tensions have been at a high point over the past two years, directly impacting global supply chains. Additionally, events like the US elections and the hung parliament in France earlier this year highlight how much harder political outcomes are to predict. Due to increased polarisation, these outcomes can have far-reaching consequences for free trade and globalisation.
These dynamics, along with the lingering effects of the pandemic, are forcing organisations to rethink their supply chain strategies and assess how resilient their geographical footprint truly is. The Financial Times aptly describes this moment as the ‘‘age of anxiety,’’ driving industrial firms to adapt by becoming more efficient, transparent and predictable while reducing their exposure to risk in a world that increasingly appears to be "de-globalising."
How are industrial firms mitigating risks in light of geopolitical tensions?
A key response to geopolitical risks has been the strategic relocation of production sites. The semiconductor shortage of 2020 that affected several sectors, including automotive and health, in particular, highlighted the vulnerability of just-in-time supply chains to international tensions and disruptions such as the pandemic.
As a result, both the US and EU are now actively working to repatriate critical industries like semiconductor production with initiatives such as the EU’s 43 billion euro European Chips Act. Beyond semiconductors, industrial companies across several sectors are shifting to regional production sites in order to reduce their exposure to political and geopolitical risk.
What steps are being taken to accelerate the relocation of industrial sites in Europe?
To expedite the development of new sites, industrial companies are leveraging advanced technologies like building information modelling (BIM) and advanced work packaging (AWP). These methodologies enable industrial businesses to save significant time on plant construction and increase automation levels.
For example, Irish group Mercury, one of Europe’s main players in the design of semiconductor factories, now relies on a highly-automated design process which helped it eliminate up to 65% of the hours spent on plant design. By embracing new technologies, industrial firms can effectively reduce labour costs and risks while ensuring that new sites become operational quickly and remain competitive.
How are supply chain strategies evolving in response to recent disruptions?
The regular occurrence of disruptions to global supply chains, such as the Suez Canal blockage due to the Ever Given incident and tensions in the Middle East, have caused significant delays and increased transportation costs. In addition, international uncertainties have made the cost of raw materials very volatile amid high global demand.
The sectors most affected by these disruptions share two commonalities: a high dependence on globalised supply chains and significant induced costs in the event of delays or disruptions. These repeated disruptions have prompted industrial firms to shift from a “just-in-time” to a “just-in-case” approach to become more resilient.
For the construction industry especially, these disruptions can have far-reaching consequences as supply delays can trigger financial penalties and sustained labour costs while workers await necessary material deliveries. According to a Hexagon study for Jovix, this waiting time represents 15% of a construction site's labour costs, which can represent tens of millions of dollars on large-scale projects. As a result, the need for new solutions and technologies is crucial for businesses to tackle delays and adapt to unforeseen circumstances.
What role does technology play in helping industrial companies cope with these uncertainties?
In the context of high uncertainty, technology can offer industrial organisations two benefits: predictability and adaptability. Across the supply chain, acquiring the ability to adjust more quickly to unforeseen events has become crucial. Companies increasingly turn to adaptive approaches such as material readiness that help create transparency over materials, optimise their availability based on when they are needed and provide early warnings when disruptions occur. This allows for proactive adjustments rather than costly last-minute fixes and delays.
Another important capability that digital platforms enable is risk-based approaches. In capital projects, for example, an enterprise project performance platform can allow companies to capture, manage, visualise and communicate different levels of risks and optimise resource allocation based on them. This enhances project predictability and reduces the impact of unforeseen changes. It also helps avoid taking up high-risk, loss-making projects.
By addressing blind spots, data silos and other 'black boxes,' these methods enable companies to adapt more quickly to a rapidly evolving environment—whether it's dealing with supply chain disruptions, navigating new regulations or adapting to de-globalising measures.
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