Never provoke a wounded bear into a rage. Kill it outright, or the consequences could prove deadly, a retired senior executive for Valeo-Sylvania told me recently. This former president, who once helped guide the production of automotive headlamps for the international manufacturer, suggested that the U.S. sanctions on Russia for its aggression into Ukraine are fraught with risk. "Globalization is efficient but not resilient," he said. 

Economic sanctions may hurt American consumers more than Vladimir Putin and his cronies. The United States automotive aftermarket may have already begun paying the price as most organizations cope with a kinked-out supply chain. 

It would be naïve to conclude that Vladimir Putin disregarded the economic penalties slapped on Russia by the western nations, South Korea and Japan. Consider Putin's perspective: invading resource-rich Ukraine could be the perfect storm to overheat America's economic engine. My friend suggested that Russia is adept at finding ways to devalue the U.S. dollar overseas to raise import costs further. 

Timing is everything in the bear's gambit to ride out his war. Despite robust demand for auto parts and motor oil, every segment of the U.S. aftermarket is feeling the sharp lashes inflicted by the bullwhip effect throughout the world. Inflation marks a 40-year high. Just-in-time-inventory models are breaking down. Product shortages from engine lubricants to automotive batteries are stretching lead times. 

"Given the backlog from COVID, port and trucking difficulties, chip shortages and now the war in Ukraine, we can now expect the supply chain to remain in flux," wrote Neury Freitas, senior advisor at Roland Berger, a global consultancy. 

 Undoubtedly, any return to the just-in-time supply chain flows is unlikely.  

 Economic policymakers of all stripes are drawing similar conclusions as Freitas, who has been monitoring the pandemic's near destruction of nearly 25 years of uninterrupted flows of raw materials and finished goods. "Companies will have to continue to work around supply chain constraints and have creative solutions to succeed." 

Achieving many of Freitas's solutions is within reach. He argues for the active use of supply chain towers and risk management software platforms to dampen future shocks. As Freitas sees the bullwhipping effect snapping the fragile supply chain, coordinated data sharing with the closest trading partner could yield benefits. Widened visibility from warehouses up to tier one vendors could improve planned response times. So, too, with localized activity that can help to mitigate points of failure. 

Yet risk management is underrated, if not misunderstood, for its purpose. No matter how remote the disruption, avoid the temptation to table risk management. Take British Petroleum Castrol's decision to exit Russia, a major fossil fuel supplier. Or factor in the other harvested strategic metals and rare earth elements in Russian and Ukrainian reserves. Cobalt belongs in rechargeable batteries. Lithium is commonly found in lubricants. Brakes require graphite for the linings. As noted by The Economist, “energy and commodities lay at the dark heart of Vladimir Putin's regime." 

Pieced together, the added fallout of further shipping disruptions is testing the industry's resilience. Despite the mixed results of the Biden Administration trying to cut off Russia, Ukraine has also found itself cut out of European trade. 

Most critical to risk management is what happens when costs become uncontrollable and unfinished goods are harder to substitute. Leoni, a German automotive wire maker, voiced anxiety about reduced production output. Standard Motor Products operates an engine management plant in Białystok, Poland, a few hours’ drive from western Ukraine. Asked about how the plant might cope should the conflict spread, the CEO of the public manufacturer declined to speculate. 

Consequently, buzzwords such as "agility," "lean manufacturing," and "resilience" are increasingly becoming outdated. Risk management practices need to be vocalized in practical terms so long as the pandemic, freight container port congestion and other events fragment globalization beyond repair. 

Other industry supply chain thinkers have endorsed risk management without articulating what those steps might mean. Low sourcing costs for the sake of being the cheapest supplier may lead to unintended consequences such as low-quality, high-defect products. The aftermarket needs to sidestep those pitfalls when new car production is at its lowest point and the vehicle's average age is reaching another peak.   

Down to the mass distribution level, sales planners shouldn't be surprised by customers asking who should become the most reliable supplier. No rational spare parts merchant would dare risk losing a customer over unreliable price, quality and availability. 

While some observers may argue that either Covid or the economic war on Russia marks the tipping point, we now need to think past the fundamentals of just-in-time inventory management. Predictable inflows will demand a whole new set of requirements. Contracting multiple suppliers from various geographies is just the starting point.  

Nearshoring manufacturing and local shipping operations have always come up in discussions. However, since the pandemic, movement in that direction has been tentative due to the astronomical costs of retooling, labor and product undertakings. All of this thought may lead us to say goodbye to the way we know JIT. 

Much to its credit, the Biden Administration marched forward to boost lithium, nickel, graphite, and magnesium mining under the Defense Production Act. It's unclear to what risk management strategy would be needed due to the Biden calculus. 

Still, this incremental step is a welcomed step to wean our county's dependence on the other nation's natural resources, which will allow us to gain a dominant share of the EV battery technology market that supports tomorrow's vehicle park. Typically, mine openings of this scale can last years before reaching full capacity, which still begs the question about whether the wounded bear will make it out alive. 

Multiple lessons about the Great Supply Chain upheaval abound. Further chaos caused by Russia should be enough incentive to bring risk management discussions to the board room. Thank you to the suppliers that prioritize supply chain risk management as part of their distribution strategy.