This is the sixth time the monthly round table of experts from the Institute for Supply Management® (Ism®) Convened, and as a panelist pointed out in this edition, the potential disruption of a Breaking News news event was a regular subject.
As supply professionals have learned this in the past five years, certain risk management principles will be well used their organizations in a disturbance. However, each disturbance is different, and although the complete ramifications of the Israel-Iran conflict are still to be determined, it will probably have a significant impact on the supply and prices of oil.
The panel – Thomas W. Derry, CEO of ISM; Jim Fleming, CPSM, CPSD, director, product development and innovation; Paul Archiopoli, CPM, CPSD, CPIM, CMFGE, expert in matters; And Michelle Rohlwing, MBA, Director, Product Development, Innovation and Apprenticeship – also discussed how to do the best purchase profitability analysis and to remember from the annual conference of the ISM World 2025 in Orlando, Florida, earlier this month.
Q: Eruption hostilities between Israel and Iran recall another recall of the impact that geopolitical disorders can have on supply chains. Does the “fog of war” make such conflicts the potential disturbance the most difficult to manage? How can organizations mitigate the impact – for example, Iran potentially restricts the Hormuz Strait – on the supply chains already slowed down by tariff ramifications?
Derry: One of the possible benefits of the Iran-Israel conflict involves the oil market. Despite American sanctions, China is a major client of Iran’s crude. If this diet was disrupted, China should replace elsewhere. Russia could be an obvious source, given the strategic collaboration between these two countries. But it has the potential to increase the prices of petrochemics and derivatives worldwide. So, I would closely monitor the oil markets if, for example, I am an ethylene buyer.
Archiopoli: It is far too early to speculate on the impact of the Iran -Israel conflict, because the range of possible results is very wide – of “nothing” to the nuclear conflict launched from one or the other of the parties. The Hormuz Strait is very little likely to close, given the strong presence of the American navy in the region. My personal vision of a “most difficult” disturbance would be a total closure of the supply lines which are essential for American health and security, as well as vital articles for national defense. I am much more worried about supply chains such as pharmaceutical products and minerals of rare earths.
Rohlwing: I agree with Paul – it is too early to speculate at this stage. In conversations with practitioners from my network, most said they were in the way for this potential risk. As always, supply chains must do what they can to be agile and resilient. The Hormuz Strait is known to manage a large amount of world oil deliveries. The affected companies should analyze their data to determine the best strategies and scenarios to mitigate this risk so that they can modify the directions if necessary. Maritime companies should check their contracts to see if they can change their route in the event of risk.
Flemish: We see a model during the last number of months in these round table discussions: there is always a certain crisis which has a potential impact on global supply chains. Now, the world focuses on the Iran-Israel conflict, which is the third war or the major conflict in the past three years, with Russia-Ukraine and the Isreal-Hamas. In recent years, we have supported a pandemic, prices, shortages of rare earth elements, geopolitical tensions, climate -related disasters and many other disturbances. I am almost sure that we will be faced with a new crisis or expanding in the near future. Supply chain professionals must Continue to invest in the capacities and talents which focus on generation and preservation of income. There are very sophisticated (affordable) technologies that can help risk identification and scenarios planning. The supply chains and their professionals must be resilient and make risk management a standard means of doing business. “There is always an extraterrestrial battle cruiser, or a radius of Corillian death, or an intergalactic plague,” said agent K in “Men in Black”. The character of Tommy Lee Jones added that people never know these threats because men in black prevent them and maintain peace. Professionals in the supply chain are similar to men in black.
Q: Gartner Research found That most organizations of the supply chain have no formal artificial intelligence strategy (AI), partly due to doubts about the high return on investment. In general, what is the best way for the supply of taking investment in managers, for AI or any initiative?
Archiopoli: The return on investment and the analysis of profitability of investment in supply to AI are the same as for any other investment: (1) The reduction of staff costs, (2) Reduction in costs of purchase prices, (3) Reduction in logistics and operations costs, (4) The inventory turns the increase and (5) the more effective use of the bearing fund. Such a return analysis should show that the investment will provide a tangible return within the period and the financial requirements of the organization.
Rohlwing: The best way to implement any major strategy is to follow the principles of change management. Know your stakeholders, assess their greatest points of pain and find a way to implement the AI where it can make the biggest difference. Start small, so that the investment is modest but, if it is strategically placed, can have the greatest impact. It is always good to obtain case studies with similar scenarios in which the implementation has provided cost savings. Finally, small startup often facilitates membership and develop.
Flemish: In Ism World 2025, Patrick Marlowe de Google spoke of AI adoption rates being higher for companies that adopt a planned approach. First of all, identify a problem, then define the value of the company, select the technology and the governance institute. The second step is critical. It is very important not only to show the link with the commercial value, but also to articulate it using the language of senior managers. Professionals in the supply chain must also be professionals. Forbes recently published an article, “19 ways to measure the return on investment of your AI initiativesThis is just an example of the number of ideas available thanks to simple web research. We must remain curious, informed and connected to the commercial value.
Derry: We have conducted research at ISM which shows that the first quartile of the management teams produces the return on investment four times that the lower quartile. The lower quartile always returns 150% in the return on investment in the organization, but high -level teams refer more than 600%. And the botter is that the highly efficient teams get this return with 60% less head enumeration. How do they do this? With better training, tools and processes. So, I would look for cases of use of AI which allow my team to be more productive with less number of heads. I know that there is a thought that AI will perform more banal tasks, releasing humans to do more strategic work. There is probably a grain of truth to that. But we must also accept that AI can in fact replace certain existing positions.
Q: For those of you who attended the ISM World 2025What was your most precious experience or learning of the conference?
Flemish: I had the chance to moderate the discussion panels with the winners of the Trailblazer Prize. Their successes to overcome the obstacles of the complex supply chain were incredible. The one who stood out was a pharmaceutical company providing vital medicines to people in northern India struck by floods. This humanitarian effort has taken advantage of drone technology in large territories. Several complex variables had to be treated, including critical control of the temperature of drugs, the government’s approvals of the flight trajectory, landing and safety of take -off zones and changing weather conditions. But all this cooperation and this innovation have borne fruit, establishing new standards in risk management within a supply chain.
Rohlwing: The best part of the ISM World 2025 for me was to meet in person all the members and volunteers of the ISM with whom I spoke practically in the past year. It’s always great to connect with people in real life. I found that the sessions in small groups were super impactful and interesting. My favorite session was “sustainable purchases in action”, where I learned that continuous collaboration with suppliers helps integrate sustainability in daily operations, stimulate improvements, resolve challenges and share innovations over time. Finally, the discussion of the former secretary in the United States of trade Gina Raimondo on the Puces and Sciences Act during his opening session gave me a more in-depth understanding of his efforts to strengthen the American semiconductor industry.
Derry: My biggest point to remember was the conversation which was almost exclusively around prices and the way they disrupt the supply chains. But I also learned that in six months or less, organizations should have clarity and can fully deploy their attenuation strategies. Although we will probably continue to live with prices as a new fact of life, we will have learned to treat them. We will be solving other problems by 2026!