Gartner: How to secure Mideast supply chains from Israel-Iran conflict
Gartner Inc. has identified three critical priorities for chief supply chain officers to implement to protect their Middle East operations.
In response to the ongoing impacts from the Israel-Iran conflict, Gartner advises that chief supply chain officers should assess and mitigate their exposure to new global transportation bottlenecks, prepare for continued supply chain cost volatility, and review their supply chain resilience strategies.
More specifically, Gartner makes the following recommendations in each area where chief supply chain officers should take extra precautions.
Bottlenecks
Gartner says the conflict is causing significant bottlenecks in key regional shipping routes and logistics hubs, including:
- Red Sea and Suez Canal: Container traffic remains well below pre-crisis levels, with major shipping lines avoiding the Suez Canal. Supply chain executives are advised to monitor transit times and adjust expectations for longer lead times and higher costs.
- Strait of Hormuz: Heightened risk of disruption is causing delays and congestion in the Strait of Hormuz. Supply chain leaders should engage partners to identify and manage new shipping options.
- Regional ports: High-volume Mideast ports such as Jebel Ali, Khalifa Port, Dammam and Haifa face increased pressure, with some having already faced service interruptions. Gartner advises that contingency planning for alternative ports is essential.
- Eurasian rail freight: Demand for rail freight between Asia and Europe has surged, leading to congestion and longer booking times. According to Gartner, organizations should weigh higher costs against faster transit times.
Cost volatility
Gartner advises that ongoing disruptions in the Middle East are driving up supply chain costs across energy, transportation, insurance, inventory, and technology, so chief supply chain officers must proactively engage CFOs to assess budget impacts and prepare for increased spending, particularly in new solutions that enhance visibility and risk management.
Resilience
Gartner recommends that chief supply chain officers identify risks to critical raw materials, ensure the continued flow of finished goods, and conduct cost-benefit analyses of mitigation actions in partnership with finance leaders.
Survey: Risk management becomes leading concern
These recommendations align with findings of an August 2024 Gartner survey of chief supply chain officers that showed risk management considerations, such as improving resilience, in addition to enhancing flexibility and agility, have displaced cost-efficiency as the top drivers of supply chain network changes.
[READ MORE: Gartner: What drives supply chain network changes?]
Top factors driving changes to the supply chain network in the past two years included increasing resilience/redundancy as part of risk management strategy (46%) and external geopolitical pressures (26%).
"As the conflict between Israel and Iran oscillates, chief supply chain officers must leverage the resilience they have built in recent years, recognizing that the global significance of this region makes it nearly impossible to avoid adverse impacts, even if only indirect," said David Gonzalez, VP analyst in the Gartner supply chain practice. "This conflict should serve as a catalyst for improving organizations’ supply chain resiliency plans over the long-term."
