Supply Chain
Resilience Report
2021 Update
Industry trends and supply chain strategy
for manufacturing

press@protolabs.com
hubs.com

EU +31 85 888 7380
US +1 845-402-8321

Thank you for your interest in this trend reportby Protolabs. This report was originally publishedby Hubs, a company acquired by Protolabs in 2021,
so you will see references to Hubs listed throughout.
If you are interested in additional trend reports,
check out the selections available on Protolabs
and Protolabs Network.
Feel free to get in touch with
networkmarketing@protolabs.com
if you have any questions.

75%

64%

of companies have experienced externallycaused disruptions to their supply chain
in the past yearof companies consider supply disruptions
a serious concern

63%

57%

of companies have implemented measures in
the past year to build supply chain resilienceof companies believe diversifying their
supply chain is the best way to avoid
disruptions in the future

98%

56%

of companies believe measures should betaken to avoid future supply chain disruptionsof companies have experienced more supply
chain disruptions this year than last year

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

2 / 41

Table of contents
Introduction: Supply chain resilience - what it means and why it matters

5

Defining supply chain resilience5

The rising need for resilience

6

Building supply chain resilience in your organization

7

The rising risk: The growing number of supply chain disruptions over time9

Not all disruptions are created equal

10

Top supply chain concerns

11

COVID-19 spotlight: An extreme example of supply chain disruption

20

Global online manufacturing supply capacity

21

The flow of supply and demand

24

Building supply chain resilience:
Effective measures organizations can take to mitigate disruption28

1. Creating autonomy29

2. Developing flexibility

32

3. Increasing visibility

35

Conclusion

37

About this report38

References40

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

3 / 41

Introduction

Supply chain resilience what it means and why it matters

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

4 / 41

Introduction
Supply chain resilience - what it means and why it matters
Complex manufacturing supply chains face more risks than ever. A disruption in one
country ripples around the world, leaving unprepared companies to experience damaging
interruptions. Simultaneously, the number of disruptions is rising. As each risk has uniqueelements and timing, planning and prediction is impossible. Traditional strategies don’t
support the flexibility and adaptability required to survive, let alone grow stronger.
But some organizations react to disruption far better than others. These organizations
cope with unknown and unknowable risks due to one characteristic: resilience.

Defining supply chain resilience
Supply chain
resiliencedescribes a supply
chain preparedfor unforeseen
disruptions, that's
able to react andrecover quickly,
and emerge stronger

Supply chain resilience describes a supply chain prepared for unforeseen disruptions,that's able to react and recover quickly, and emerge stronger after the event.
Though many companies believe supply chain resilience merely implies the ability
to manage risk, true resilience enables you to position your organization better
than competitors in order to deal with and gain advantage from disruptions.[01]Resilience is not a new concept, but the need for it has become greater as the frequency
and severity of risks have increased, which comes naturally with an evermore complex,
globally stretching supply chain. Supply chain resilience does not develop passively,
as it’s impossible to plan for every potential risk. Instead, it demands a dedicated,
deliberate strategy to strengthen your organization in the face of the unexpected.
Resilience is crucial to the manufacturing industry, as generating revenue relies on
adding value at each link of the supply chain, from the raw materials to the finishedproduct. If one of these links becomes broken, or disrupted, value can no longer be
added, making a resilient supply chain essential to bringing products to market.

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

5 / 41

The rising need for resilience
From trade wars and material shortages to COVID-19 and changing labor environments,
supply chain resilience is becoming a priority for many companies. The rise of global
trade means companies have more moving pieces stretched over greater distances withless slack in the system. And with a growing global population and a growing economy,
significant supply chain disruptions are inevitable.[02]Simultaneously, companies are still relying on a single company for certain parts in orderto achieve lower costs.[03] Reducing essential processes and resources to a single ora few sources creates a dependency on deep-tier suppliers as well as on concentrationsof supply sources that create fragile chokepoints in the global economy. Only a handfulof countries are responsible for the world’s supply (see Figure 1) and, as many companies
experienced with the COVID-19 outbreak, this over-reliance can have catastrophic
long-term effects on supply chain operations.
Disruptive events can have material impacts on financial performance. Hertz, J.Crew
and Neiman Marcus all filed for bankruptcy as a result of the coronavirus pandemic.[04]Back in 2018, Ford lost $1.6 billion in revenue and was unable to produce 35,000 vehicles
owing to a fire in one of their plants.[05]Additionally, a fragile supply chain often damages a company's brand reputation ascustomers express their displeasure.[06] With the rise of social media and 24/7 news,
there’s a growing brand risk based on rapidly shared public opinion.[02]Unfortunately, disruptions cannot be avoided. Instead, companies must prepare to
overcome challenges, which may mean rolling back some supply chain innovationsof recent years, such as lean manufacturing, in order to develop long term resilience.

Figure 1: China is the world's manufacturing superpower
Top 10 countries by share of global manufacturing output in 2019*

China

28.7%

United States

16.8%

Japan

7.5%

Germany

5.3%

India

3.1%

South Korea

3.0%

Italy

2.1%

France1.9%

United Kingdom

1.8%

Indonesia

1.6%*Output measured on a value-added basis in current U.S. dollars
Source: United Nations Statistics Division

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

6 / 41

Building supply chain resiliencein your organization
Having a clear strategy to mitigate supply chain disruptions is the first step to developing
the resilience that will satisfy customers and reduce the economic impact of events.
Going forward, this report will examine the reasons behind the increasing numberof supply chain disruptions, with a feature section in Chapter 3 that explores the effects
of COVID-19 on the world’s supply capacity supported by Hubs platform data.
The final chapter will discuss three primary approaches, listed below, to help strengthen
your organization’s supply chain:
1. Creating autonomy
2. Developing flexibility
3. Increasing visibility
These actions are designed to assist you in managing risk during the rising amountof supply chain disruptions. After all, it's not a matter of if your organization will
experience disruption; it's only a matter of how often and for how long.

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

7 / 41

The rising risk

The growing number of supply chain
disruptions over time

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

8 / 41

The rising risk
The growing number of supply chain disruptions over time
Supply chain volatility is not a new phenomenon, but it is occuring more frequently,
affecting a range of different industries and regions due to an increasing array of threats.
In parallel, supply chains have become more complex and brittle as a result of
globalization.[07] The more complex businesses become, the broader the spectrumof threats.
This chapter begins by discussing the level of damage and predictability associatedwith each type of disruptive event. It then continues by examining the increase of certain
supply chain disruptions and their causes.

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

9 / 41

Not all disruptions are created equalWith the rising number of supply chain disruptions, it’s common for businesses to focus
their attention on events that are easier to anticipate and control. However, developing
supply chain resilience will mean examining all variations of risk, and deciding to tackle
each disruption type deliberately and strategically, rather than concentrating on the most
predictable risk.
Generally, disruptions can be assessed on the basis of two factors: their predictability,
as companies seek to plan long term, and how impactful they are, in terms of themagnitude of the disruption they cause to manufacturing supply chains. Figure 2
summarizes the most common and relevant disruptions that supply chains currently face,categorized by their level of predictability and impact.
A robust supply chain strategy should aim to mitigate disruption in each quadrant. The
quadrant of Low Predictability paired with Severe Impact is one that is often ignored, as
it is the hardest to anticipate which effects will be the consequence of these disruptions.
These disruptions, sometimes referred to as “unknown unknowns” or “Black Swans”[04],are difficult to imagine occurring, let alone to develop a targeted strategy to reduce
the effects. However it’s clear, with the coronavirus pandemic being the harshest,
most recent example, that these Black Swans demand sufficient attention to avoid thedevastating aftermath. A resilient supply chain will allow your organization to better
cope with a range of different disruptions, both known and unknown.

Figure 2: Supply chain disruptions categorized by level of predictability and impact

Terrorist attack

Pandemic

Fire
Cyber attack

Wind damage
Low

Flood

Predictability

Storm
Loss of important supplier
Earthquake
Economic recession

Loss of talentHigh

Brexit
Evolving
customer needs
Alterations tolegislation+ compliancestandards
Mild

US - China
trade war

SevereImpactSource: Hubs

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

10 / 41

Top supply chain concerns
According to a Hubs survey conducted in October 2021 with 437 respondents, 75% ofcompanies have experienced some form of external disruption to their supply chain overthe past year. This survey built upon the 2020 supply chain resilience report that showed
72% of companies have experienced some form of external disruption to their supply
chain over the last ten years, so concern is growing. In fact, 56% of respondents in our
2021 survey indicated that their supply chain disruptions have been worse this year thanlast year, citing material shortages as the main challenge.
In the past two years, companies have faced a dramatic escalation in trade tension andby sophisticated, large-scale cyber-attacks. At the same time, production and logistics
operations survived a broad range of disruptive events, including natural disasters,material shortages, price hikes, industrial fires and explosions, production restrictions,labor disputes, port congestion, and cargo and warehouse theft.[08]Main concerns from the past 10 years

There have been three key categories that risk managers have reported to fear
the most since 2016: natural disasters, geopolitical issues and cybersecurity,
as we see reflected in Figure 3.

Figure 3: Fastest rising supply chain risks
Respondents are increasingly concerned about a variety of threats

2016 % very concerned2017 % very concerned
YoY Jump

50
45
40
35
30
25
20
15
10
5
0

15

19

War, terrorism or othergeopolitical issues

18

26

Natural disaster affecting supplierfacilities (e.g., earthquake, flood)

Source: SCM World Future of Supply Chain surveys
2016, 2017 (preliminary results)

Supply chain resilience
report 2021 update3044Data security / IT incidents(e.g., cyber attacks)% of respondents 2016 n=1, 409
2017 n=1, 193 (prellminary results)

press@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

11 / 41

These concerns reflect the results of our 2020 survey that looked at the most common
supply chain disruptions from the past 10 years, but there were some key differences.
72% of companies experienced some form of external disruption. Natural disasters andtrade wars (i.e. geopolitical issues) were ranked in the top three most disruptive events,
but the reality of cyberattacks disrupting businesses is disproportionate to the level ofconcern. A mere 9% of professionals actually experienced a cyberattack in the past ten
years, despite 44% expressing their concern for data security or IT incidents in 2017.[09]The severest disruption over the past ten years was pandemics with 59% of businesses
being impacted, presumably most extremely by the recent novel coronavirus. Chapter 3
has therefore been dedicated to examining the effects of the coronavirus pandemic
on manufacturing supply.
Despite the actuality, pandemics did not even place in Gartner’s rising supply chain risks. [11]This should indicate to businesses not to focus on the specific potential threats and theireffects on the supply chain. Rather it should push professionals to devote resources tobuilding overall supply chain resilience in order to respond to and recover quickly fromunanticipated disruptions, such as COVID-19.

Figure 4: Results from Hubs' 2020 survey
Top supply chain disruptions that have impacted businesses in the last 10 years

Pandemics

59%

29%

Natural disasters

21%

Trade wars

9%

Cyber attacks

Military conflicts

4%

Q: Which supply chain disruptions have impacted your business in the last 10 years?
Source: Hubs survey, 1,281 participants, conducted June 2020

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

12 / 41

Current concerns

According to the annual risk report by Everstream Analytics (formerly Resilience 360),
this past year has seen the bulk of disruption events broken into the following categories:
public safety/security, fire and ground transportation, as we see reflected in Figure 5.
There is a disparity between reported incidence and the results of our survey, in Figure 6
below, which showed the majority of respondents experienced supply chain disruptions
due to material shortages, increases in pricing and ground transportation/logistics.

Figure 5: Overall incidents by category (global)
Public holiday

0.01%

Cyber

0.27%

Structural

0.29%

Other

0.49%

War

0.98%

Labot

1.49%

Regulatory

1.78%

Maritime

1.84%

Terrorism

1.85%

Cargo

1.33%

Health

1.74%

Infrastructure

2.05%

Weather

2.70%

Hazmat2.86%

Aviation

3.05%

Production

3.25%

Natural disaster

4.94%

Civil unrest

6.00%

Ground transportation

10.04%

Fire

19.92%

Security

33.11%
0

5

10

15

20

25

30

35

Source: Annual Risk Report 2021. Everstream Analytics Annual Risk Report. March 2021.

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

13 / 41

Figure 6: Results from Hubs' 2021 survey
Top supply chain disruptions that have impacted businesses in 2021

Material shortages

57.2%

Increases in pricing

51.3%

Transportation /logistics

34.6%

The pandemic

26.8%

Lack of manufacturing capacity

22.4%

Port congestion

17.4%

Container shortages

16.0%

Q: Which supply chain disruptions have impacted your business in 2021?
Source: Hubs survey, 437 participants, conducted October 2021

Key difference between the 2020 & 2021 survey
1.	In 2020, 59.3% of people surveyed cited the pandemic as a supply chain
concern, making it the top risk. In 2021, that number dropped to 26.8%,
making it fourth on the lists.
2.	New top concerns in the 2021 list include material shortages, increases in pricing,transportation/logistics, and lack of manufacturing capacity. The pandemic was
the only issue in the top 5 concerns two years in a row. There was no other overlap.
3.	In 2021, 56% of people surveyed felt that there were more supply chain disruptions
this year than last.
4.	63% of respondents said they have taken measures to build up their supply chain
resilience, up from 52% last year.
It is impossible to predict supply chain disruptions as the causes are constantly changing
and will impact different industries in different ways. The following sections examinea range of disruptions that are a growing worry and the reasons behind their prevalence.

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

14 / 41

Geopolitical issues

Political events
such as Brexit
highlight thevulnerability of
relying on only a
few key suppliers in
critical locations

Interest in politically driven trade conflicts connected to manufacturing, particularly in
the US, has grown by almost 250% over the past 10 years.[10] The interest from the US isdriven by conflict with China, with tariffs and punitive responses leading to rising tensions
and higher costs of goods. More than 60% of organizations have reported negative
financial and/or operational consequences resulting from the US-China trade wars.[11]In response to geopolitical tensions with China, some organizations have sought new
locations for production facilities, either re-shoring or relocation to other nations withless tariff exposure.[12]Brexit has also proved to be a geopolitical supply chain disruptor. In this case, the supply
chain issues are due to several factors, primary of which are new import regulations
between the EU and UK and a labor shortage, which if not caused by Brexit has been
exacerbated by it. Fortunately, the worst-case scenario—a no-deal Brexit—did notmaterialize, meaning that new tariffs on imported or exported goods between the EU
and UK have not been implemented. However, increased paperwork and customs checks
have created hurdles for existing supply chains, exemplified by longer wait times fortruck haulers at ports of entry, which inevitably leads to longer lead times for parts andproducts.
Labor shortages are another consequence of Brexit. In early 2021, for example, lengthy
waiting and processing times for haulers at customs were in part due to a lack of trained
customs agents. As many as 50,000 new customs agents were needed to process
hundreds of millions of customs declarations.[13] From another perspective, British
manufacturers and importers are struggling to transport goods due to a lack of truck
drivers. A survey by the Road Haulage Association found that there is a shortage of over
100,000 qualified truck drivers in the UK, which has created challenges for food and fuelshipments across the country.[14] The shortage has been exacerbated by factors like Brexit
and COVID-19. The pandemic, for example, created a backlog of truck driver tests, whichstalled the influx of new drivers. On top of that, Brexit has narrowed the field of domestic
workers. This has also contributed to severe labor shortages in British industries such as
food processing.
Political events such as Brexit highlight the vulnerability of relying on only a few key
suppliers in critical locations. Moving centralized production to a new location can be
an expensive and lengthy endeavor and result in a similar risk at the new site.

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

15 / 41

Natural disasters

The mounting effects of climate change, from earthquakes to floods, tsunamis,
hurricanes, volcanic eruptions and storms, are taking their toll on supply across theworld. The number of natural disasters is rising year-over-year from 1980 to the present,
according to research from McKinsey (see Figure 7).[13]The effects of a hurricane, for example, can be long-lasting. Hurricane Harvey struck
Texas and Louisiana in 2017, causing $95 billion in damage with the average recovery
time for an affected business at 17 weeks.[13]Japan’s earthquake and tsunami in 2011 caused Toyota Motors a 99% drop in quarterly
profits.[15] While the eruption of Icelandic volcano Eyjafjallajokull in 2011 affected the
production of 2,000 Nissan cars, and halted production at three of BMW’s plants.[16]The US alone experienced 265 weather and climate disaster events, each with more than
$1 billion in damages, between 1980 and 2020.[17]In 2021, floods in Germany and China slowed ground transportation and disrupted thetransport of coal from mining regions, exacerbating China’s energy crisis.[18] In February,
extreme cold in Texas and across the United States, along with the resulting power
problems, also caused factories to shutter and transportation to halt.[19] These events werereflected in $42 billion in insured losses from natural disasters, hitting a 10-year high.[20]For organizations struck by natural disasters, the supply chain is disrupted in both
directions, for consumers as well as producers of goods and services. Unfortunately,companies have no control over this aspect of their business, and can't anticipate relief
from their governments.

Figure 7: The rising number of noneconomic disruptions

1980

1985

1990

1995

Climatic catastrophes
Hydrologic catastrophes
Meteorological events
Geophysical events

2000

2005

2010

2015

Source: McKinsey Agile Operations

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

16 / 41

Cybersecurity$13 million is theaverage cost of acybercrime incident

It varies from company to company, but the rise of digital has meant cybersecurity is
becoming a growing risk to the supply chain.
A number of companies have suffered ransom attacks or loss of data that has caused
long-term operational and legal exposure. In addition to deliberate attacks by bad actors,
technology is vulnerable to software glitches and telecommunications failures.
In 2019, 25% of companies experienced four or more cyberattacks in a year.[21] In 2020,
the percentage of businesses that reported attacks went down to 41%, but the costof attacks has gone up, with the median cost of all cyber incidents in the US having
risen from $10,000 last year to $50,000 in this year's figures. Due to extreme outliers,
the average cost is far higher than the median, coming in at 13 million per incident.[21]Overall, security breaches have risen 67% in the past five years, averaging 145 breaches
per organization.[22] Cybercriminals have moved past stealing information and are now
targeting industrial control systems and other core systems. Holding technology assets
for ransom is a growing trend.
Manufacturing and supply companies are on the front lines of cyberattacks due toincreased digitization and connectivity. In 2019, a ransomware attack crippled industrial
controls at manufacturers around the globe. Manufacturing companies are becoming
favorite targets of advanced persistent threats. In 2019, Everstream Analytics (formerly
Resilience360), recorded 290 cyber security incidents against supply chain companies.
That number shot up by 216 percent increase in 2020, including threats like data breaches,ransomware and operational vulnerabilities.[08]Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

17 / 41

Top Supply Chain Risks in 2021

In addition to the aforementioned supply chain risk categories, the past couple of years
have brought to the fore a series of other risk areas, including sudden facility closuresand mobility restrictions due to the pandemic (which will be explored in more detail in
the next chapter), as well as logistics issues such as ongoing container shortages andthe Suez Canal blockage, which brought global trade to a near standstill and cost theindustry billions of dollars.[23] Another supply chain risk that has the potential to influence
the future of manufacturing and logistics is electricity shortages, such as those impacting
regions of China and disrupting critical manufacturing facilities that businesses aroundthe world rely on.
The past year has been marked by a number of challenges, including computer chipshortages, port congestion, the ongoing impacts of COVID-19, logistics impediments,and energy crises, though with every hurdle faced, solutions are being sought.[24] What is
becoming increasingly clear is that while certain risks are hard to anticipate and difficult
to plan for, it is possible to mitigate the effects of supply chain disruptions by establishinga robust and agile supply chain.
It's critical to begin thinking about a risk-management framework to classify risks andto develop a supply chain that is by design flexible and adaptable. You can't think of
disruption as a one-and-done event. The vulnerability in supply chains and the growing
number of disruptions means businesses must start making their supply chains more
resilient now.

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

18 / 41

COVID-19 spotlight

An extreme example of supply chain disruption

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

19 / 41

COVID-19 spotlight
An extreme example of supply chain disruption
COVID-19 provides
an illuminatingcase study on
the consequencesof concentrated
vs. distributed
manufacturing

The COVID-19 pandemic has had a global impact and the financial repercussions are still
unfolding. Nearly two thirds of companies have experienced disruption due to COVID-19,
according to our survey, making it the most disruptive event to the supply chain in the last
decade. Manufacturing was the top industry affected in terms of personnel, supply chain,revenue, and operations.[25]Because the coronavirus pandemic is one of the first examples where manufacturing
capacity has been affected simultaneously worldwide, it's an illuminating case study on
the consequences of concentrated vs. distributed manufacturing. The crisis highlighted
the shortcomings of single-source manufacturing, whereby one sole vendor is selected
to produce a component part, or sometimes an entire product. The prevalence of
choke-points became very apparent as shutdowns rolled across the world and the
manufacturing bases in a particular country became idle.
COVID-19 is a unique situation because it affects both supply and demand. Manycompanies faced immediate loss of supply when China began isolating in many partsof the country, with no alternatives. Labor shortages, lack of available inventory, andin some cases an excess of inventory, have challenged organizations' supply chains.
Some industries with available inventory were able to ramp up to meet heightened
demand, while others were unable to fulfill orders regardless of changes to pricing.
The next sections analyze supply and demand data collected through the Hubs platform
to portray an overview of the real effects of COVID-19 on the manufacturing supply chain.

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

20 / 41

Global online manufacturing supply capacity
Figure 8 gives an overview of available global manufacturing capacity during the
beginning of the coronavirus pandemic, based on sourcing data from Hubs’ online
manufacturing platform.
Since last year, supply capacity across Asia, Europe, and North America has been slightly
more volatile year-to-date than 2021, fluctuating by 4.1% compared to last year’s 3.9%.
In 2020, Asia was more volatile in the first half of the year and evened out towards theend of the year. In 2021, this trend was reversed, which correlates with the coronavirus
numbers in China and India, which were rising during the first half of 2020 and relatively
level during the first few months of 2021. Overall, there have been more significantly
more coronavirus cases in 2021 than 2020 [26], which may contribute to the increase influctuations. We can see the capacity drop as countries underwent lockdowns, leading
to significantly reduced capacity.

Figure 8: Manufacturing orders sourced by continent

Sourced orders in 2020 (North America)
Sourced orders in 2021 (North America)
Sourced orders in 2020 (Asia)
Sourced orders in 2021 (Asia)
Sourced orders in 2020 (EU)
Sourced orders in 2021 (EU)

1000

500

0
1

2

3

4

5

6

7

8

9

10

Source: Transactional data from Hubs online manufacturing platform

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

21 / 41

Figure 9: Sourced orders and new COVID-19 cases in China, 2021

Sourced orders
Covid cases

900

3000

800
2500
700
600

2000

500
1500
400
300

1000

200
500
100
0

0
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Source: Hubs and Our World in Data

Figure 10: Sourced orders and new COVID-19 cases in India, 2021

Sourced orders
Covid cases

10000000

350

9000000

600

8000000250

7000000
6000000

200

5000000
150

4000000
3000000

100

2000000
50

1000000
0

0
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Source: Hubs and Our World in Data

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

22 / 41

The direct impact of the pandemic becomes more apparent by comparing the numberof COVID-19 cases against the number of orders that were sourced in India and China,
shown in Figure 9 and 10. It's clear that as the number of coronavirus cases rose, thesupply decreased significantly, and then recovered as the number of cases dropped.
As the coronavirus outbreak spiked in India during April and May of 2021, supply capacity
dropped off the chart. That is when manufacturing in China peaked, to compensate for
India’s lowered capacity. Then in July and August, as coronavirus cases escalated in
China, we saw a boost in orders sourced in India.
As the global economy adjusts to ebb and flow of the pandemic, supply chain issues have
evolved but have not gone away. Instead of triggered by full lockdowns, supply chain
challenges are caused by a combination of intersecting elements, including different
travel/mobility restrictions between nations as well as COVID-19 and vaccination
protocols. A lack of international consensus on these topics continues to create hurdles
for the mobility of transport workers.[24] It is still unclear how this specific supply chain
challenge will play out in the near future or how long term it will be.
The fluctuating supply and demand caused by the early pandemic has also had
a discernible impact. This is exemplified when looking at the semiconductor industry.
A severe shortage in semiconductors is having adverse effects on supply chains in theautomotive and electronics industries, among others. One of the causes of this shortageis attributed to automotive manufacturers dramatically reducing semiconductor orders
due to COVID-19 and a drop in car sales. When the demand for vehicles started torecover, semiconductor producers had already earmarked supplies for customers in otherindustries, leading to a shortage in automotive. Other factors, like geopolitical tensions
between the U.S. and China, as well as fires at key production plants, have also led toa shortage in this area.[27]Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

23 / 41

The flow of supply and demand
Figure 11: Supply vs. demand by continent
January
Europe (35%)

North America (42%)

Asia (35%)

North America (60%)

Europe (23%)

Asia (5%)

February
Asia (34%)
North America (60%)
North America (41%)

Asia (5%)
Europe (35%)

Europe (25%)
March

SupplyEurope (36%)

North America (41%)
North America (59%)
Europe (24%)

DemandAsia (34%)

Asia (5%)

April
Asia (35%)
North America (59%)
Europe (22%)
Asia (5%)
North America (42%)

Europe (36%)

May
North America (42%)

North America (59%)

Asia (35%)

Asia (6%)
Europe (35%)

Europe (23%)
Source: Hubs

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

24 / 41

Figure 11: Supply vs. demand by continent

June
Europe (21%)

Europe (36%)

Asia (37%)
North America (60%)
North America (41%)
Asia (4%)
July
Asia (5%)

Europe (22%)

North America (58%)

Asia (40%)

North America (38%)

Europe (37%)

AugustSupplyAsia (5%)
Europe (20%)

DemandEurope (33%)

Asia (40%)

North America (61%)
North America (40%)

September
North America (37%)

North America (57%)

Asia (40%)
Europe (37%)
Europe (22%)

Asia (6%)

October
Asia (6%)

Europe (22%)

North America (36%)

North America (58%)

Asia (44%)

Europe (36%)

Source: Hubs

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

25 / 41

Supply capacity
fluctuated per
region, but
globally suppliers
could keep pacewith demand

The Sankey diagrams in Figure 11 depict how supply and demand reflected manufacturing
disruptions as the pandemic spread across the world.
During the first part of the year, we saw higher supply coming out of North America andEurope as winter coronavirus peaks began to level out. Meanwhile, supply was lower duringthat time frame in Asia, as coronavirus numbers were on the rise in two of the continent's
biggest manufacturing hubs: India and China. Then between August and October,as cases dropped in Asia and began to rise in North America and Europe, we saw anincrease in supply coming out of Asia and a dip in capacity in North America and Europe.
Throughout this entire period, supply capacity has fluctuated per region, but globally
suppliers were able to keep pace with demand. Therefore, if an organization were tobuild out a network of suppliers distributed across the globe, there will always be supply(and demand to meet it) available. This distributed approach is the future of resilient
manufacturing which offers reliable and scalable supply.

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

26 / 41

Building supply
chain resilience

Effective measures organizations cantake to mitigate disruption

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

27 / 41

Building supply chain resilience
Effective measures organizations can take to mitigate disruption
37% of companies
have not taken any
measures to build
supply chain
resilience

As we’ve seen with the simultaneously rising complexity of supply chains and theincreasing number of disruptions, a clear strategy for building supply chain resilience
to mitigate future disruptions will be essential for businesses moving forward.
However, it seems that although organizations have coped with supply chain disruptions
first-hand, a large proportion are unprepared. According to our 2021 survey, a surprising
37% of respondents have not taken any measures in the last year to build up supply chain
resilience, despite 75% having experienced externally caused disruptions.
This chapter discusses the three approaches your organization can take to start buildinga resilient supply chain:
1. Creating autonomy (automation, additional inventory)
2. Developing flexibility (geographical diversification, agile working processes)
3. Increasing visibility (stronger supplier relationships, increased monitoring)
These approaches reflect the responses we recieved from the same survey mentioned
above, where participants selected what they found to be the most effective measures
to reduce disruptions in the future, shown in Figure 12.

Figure 12: The most effective measures to reducing supply disruptions in the future
Diversifying
your supply chain

57%

Increasing
your local sourcing

54.92%

Strengthening
relationships with suppliers

45.31%

Increasing inventory

40.05%

Geographically distributing
your supply chain

32.04%

Automating processes
within your supply chain

20.14%

Increasing transparency of
your supply chain
No measures
should be taken

18.31%
2.06%

Q: What measures do you believe would be most effective for reducing disruptions in the future?
Source: Hubs survey, 437 participants, October 2021

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

28 / 41

1. Creating autonomy
Supply chains that stretch across the globe are complex and inevitably subject tosome level of disruption. But simplifying your supply chain where possible and reducing
dependency on external parties will leave you less vulnerable to potential disruptive
events. Practically, there are two key ways for reclaiming control of your supply chain:automation and buffer inventory.

Automation

Autonomy can be created through automation from both an internal and an external
perspective.
Internally, automation reduces your reliance on manual labor, which is particularly
advantageous if production plants are forced to go into full lockdown — a case we saw
occur during the beginning of the coronavirus. Today, many business activities can be
automated using technologies such as robotic process automation (RPA), which can savecompanies significant time and resources.
In one study, the success of RPA adoption is shown to be widespread, with 41% of
respondents saying the automation technology met their expectations and 35% stating it
exceeded expectations.[28] Gartner predicts that by 2024, businesses will be able to lower
operational costs by 30% with the use of hyper-automation technologies and redesigned
operational processes.[29]Externally, by reducing links in the supply chain and increasing the speed of outsourced
production, companies have more manoeuvrability and can react and adapt more quickly
to disruptive circumstances. If, for instance, the lead time for a certain part is 30 days,
the parts in that order are stuck in production for the duration, and it can be a challenge
to reroute to a different operational manufacturer or cancel an order. Additionally, speed
in your supply chain leads to a faster recovery after the disruption.
For example, the quoting process, or RFQ and DFM process, for outsourced
manufactured parts, can be reduced to seconds, rather than the traditional manual partquoting process, which can take anywhere from days to weeks. There are now platforms,
like Hubs, that scan CAD files and give you a quote in a few seconds, allowing companies
to radically cut down on pre-production time and receive parts 45% faster than traditional
methods (see Figure 13).

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

29 / 41

Figure 13: Time to source: online vs. traditional manufacturers

RFQ & DfM
Lead time
Shipping

ManualAutomated

1 week2 weeks

3 weeks

4 weeks

5 weeks

Source: Hubs

Volkswagen automating Zickau plant
to produce up to 330K electric cars per year
Since 2018, the Volkswagen Group has been
investing heavily in automation to become
the largest and most efficient electric car
plant in Europe. The cockpit assembly is
now fully automatic and a robot automaticallyinstalls the rear and front axles on the
chassis frame. Automation has also been
incorporated in other areas of the plant,
aside from assembly, to automatically inspect
the surfaces after final assembly and todeliver and unload the batteries forthe electric vehicles.

Supply chain resilience
report 2021 update

In the future, the Volkswagen Group islooking to automate other processes likethe fine tuning of the chassis in the car,and the sorting of finished pressed components
with computer vision. This investment inautomation means the Volkswagen Group is able
to accelerate their processes and rely lessheavily on manual labour in order to produce
up to 330,000 electric cars per year from2022.[30]press@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

30 / 41

Additional inventory

By creating redundancy at various points in your supply chain, you can buy yourself
extra time once a disruption hits. In the best case scenario, you’ll have enough inventory
to continue operations during the disruption. Otherwise, you’ll at least have more timeto prepare a thorough contingency plan.
This approach is especially valuable for critical parts, where it may be more difficult toswitch suppliers quickly. Although effective, this solution is costly, as you’ll need to pay
for storage and non-revenue generating stock.

Learn more about how supply chain inventory buffers can mitigate risk in this article

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

31 / 41

2. Developing flexibility
As Elon Musk has put it, “It's OK to have your eggs in one basket as long as you control
what happens to that basket.” The issue in manufacturing is that the supply chain is
so complex and contains so many moving pieces, you will never control the basket andwill never become completely self-reliant.
Therefore, a key factor in supply chain resilience is planning for disruptions by spreading
your risk. While you may not have a specific plan in place, you can strategize a responsewhen key external suppliers are not able to meet their commitments. These approaches
to developing flexibility are discussed below.

Make it easy to shift production between facilities

Diversifying
your supply chain
is the best way to
reduce the impact
of disruptions

Don’t rely on a select number of suppliers, or even on a certain geography where all
your suppliers are based. As we’ve seen during the height of the coronavirus pandemic,
entire countries or regions can be affected by disruption with zero supply capacity.
Instead, focus on diversifying your supply. Build a quality-vetted, geographically
distributed network of engaged suppliers that you can rely on to take on more capacity
when needed.
Diversifying your supply chain was voted the number one measure to reducing the impactof future disruptions (see Figure 12), which is understandable given the effectiveness ofa distributed network during the beginning of the coronavirus pandemic.
As we saw in Chapter 3, when China went into lockdown at the beginning of 2020, themajority of manufacturing orders shifted to India, and some to Europe. In May of 2021,
when India entered into full lockdown, cutting off supply completely, China was able tocompensate for India's reduced capacity.
Despite entire regions being in total lockdown during the pandemic, supply capacity
has remained available across the world, further highlighting the strengths in building
a distributed network of suppliers. Ongoing risks, such as power crises, labor shortages,
and natural disasters reinforce this idea. These disruptions may upend certain industries
and geographical markets, but an adaptable supply chain that is not solely reliant ona single supplier or region will be able to withstand them.
As an alternative to diversifying your supply chain yourself, which is a time-consuming
and complex process, you can rely on specialized manufacturing platforms, such as Hubs,
to provide you with instant access to a distributed network of hundreds of quality-vetted
suppliers.

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

32 / 41

Hubs’ distributed manufacturing network is made up
of 240+ suppliers, spread across 4 continents

Encourage agility in your internal working processes

There are many techniques to making a business more adaptable to change. These include
working in an agile process, completing tasks simultaneously instead of sequentially. With
this way of working, you can easily reallocate resources where needed, adapt unfinishedproducts to meet demand, and iterate on product design faster.
Reallocating your resources not only includes adapting parts or unfinished products,
but also cross-training employees, who are then able to help fulfill demand in areas of
the business that are not entirely their own. Research shows that even training plants tomake as little as two different products can achieve extremely high levels of flexibility.[04]Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

33 / 41

GE using agile to launch new products
in months rather than 5 years
GE Appliances started incorporating an agile
manufacturing approach called FastWorks
in 2013, which involves working closely withcustomers to get direct feedback throughout
the design process. The first product to test
this agile methodology was a refrigerator
with french doors. A small team, with half
the budget, were tasked to redesign every
part in the refrigerator, and to havea working product ready in three months andin production in less than twelve months.
Rather than the previous approach of letting
the sales team guide the specifications of
the product and then launch it, the productdesign team communicated directly withcustomers at every stage of the design
iteration process.

Supply chain resilience
report 2021 update

In less than a month, they presented thefirst version to customers who shared their(negative) feedback. Taking on theircomments, the product design team managed
to produce a new iteration to discuss withcustomers on average every month. This wasa radical change compared to the previous
secretive process where nothing was revealed
until the public release every five years.
The agile way of working paid off with thenormal rate of sales doubling. GE Appliancesdeveloped stronger relationships with theircustomers and were able to adapt fast to
shifting demand - two key advantages inovercoming supply chain disruptions.[31]press@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

34 / 41

3. Increasing visibility
For areas of the business where you cannot control or react fast enough (no matter how
flexible you are), another option is to increase visibility over your supply chain in order tospot oncoming disruptions faster and therefore give yourself more time to react. Methods
for increasing your visibility are explained below.

Monitor your whole supply chain

A lot of companies only monitor tier one or two suppliers, but this doesn’t paint the whole
picture. Delays caused by deeper tier suppliers, or even a lack of raw materials, can cause
disruption throughout your entire supply chain. By closely monitoring suppliers across alltiers, you’ll be able to spot any warning signs well before the consequences of a disruption
take effect.
However, monitoring your supply chain from the raw materials to the finished productcan be a complex and lengthy process. This may explain why this approach was theleast popular according to our survey, with 18.3% of respondents selecting increasingtransparency in the supply chain as an effective measure to reduce the effects of supply
disruptions.
Thankfully, the complicated monitoring process has become a lot easier thanks to supply
chain monitoring software. This type of software generally comes with these features toautomate much of the manual monitoring and calculations required to have an overview
of supply chain risk:•	Supply chain mapping

to monitor not only tier one and tier two suppliers, but the entire supply chain•	
24/7 supplier monitoring

which alerts you to disruptions that may affect your suppliers•	
Risk calculation of disruptive eventswith the potential revenue lost
Learn about 4 tools to help monitor your supply chain

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

35 / 41

Build deeper relationships with suppliers

Gaining knowledge of possible oncoming disruptions can not only be achieved throughmonitoring suppliers for performance and compliance, but also by developing deeper
relationships with a select group of suppliers.
By developing a close relationship by forewarning the suppliers of any changes in demandor order changes, and perhaps involving them in some product decisions, you’ll receive
earlier updates and alerts of future disruptions further down the supply chain in return.

Getting to the top of Indian supplier’s
priority list during COVID-19

While production in China and other partsof the world had stalled due to thecoronavirus pandemic, Hubs’ manufacturing
partners in India prioritized customer orders
from Hubs over their other customers.
This was largely due to the strong relationship the Hubs supply team has built with allof their suppliers prior to the outbreak.
After following a rigorous quality audit andonboarding procedure, Hubs suppliers receive
a daily check in as well as regular on-theground visits. But the strength of the relationship does not come from a traditional
one-way customer-supplier relationship, butrather a two-way partnership. For instance,
if the supplier has difficulty producing thepart or understanding the customers’ design
requirements, Hubs will work together

Supply chain resilience
report 2021 updatewith the supplier to fix or improve thoseissues and processes.
Similarly, Hubs returned the favor byprioritizing certain suppliers that were
hit the hardest by the coronavirus pandemic.
During COVID-19, many suppliers lost orders
from the motionless aerospace industry.
To help these struggling suppliers fill theloss of orders, Hubs offered an increased
number of orders to these manufacturers.
Building this deep relationship doesn’t only
come from monitoring or frequent communication, but a partnership where both supplierand customer prioritize the other in timesof need, which can benefit both parties during
a disruptive event.

press@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

36 / 41

Conclusion
Creating autonomy, developing flexibility and increasing visibility across your supply
chain will help your organization to reduce the number of vulnerabilities in the supply
chain, spot upcoming disruptions, and mitigate the effects of disruptions when they
inevitably do occur. These three approaches will not only strengthen the company inthe face of oncoming disruptions, but also serve the company in calmer times.
The number and the type of disruption is out of your control. Resilience is not. Making
the deliberate choice to develop a long-term strategy to overcome disruption, whateverits effects is the only option. Those who don't pursue resilience become ever more
vulnerable in the face of the rising number of supply disruptions, and their wider reachingconsequences, to come.

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

37 / 41

About this report
Hubs
December 2021

Editorial:
Tess Roberts & Merritt Gurley (Hubs)
Design:Jungeun Lee (Hubs)
Contributors:
Diego Camelo Martinez & Karin Kamphuis (Hubs)
About Hubs
Hubs is an online manufacturing platform that provides engineers with on-demand accessto a global network of manufacturing partners. Users can easily upload their design,
instantly receive a quote, and start production at the click of a button.
Founded in Amsterdam in 2013, Hubs was acquired by Protolabs in January 2021. To date,Hubs has produced more than 7 million parts, using various manufacturing technologies,
including CNC machining, 3D printing, injection molding and sheet metal fabrication.
Disclaimer
The information in this report is provided for informational purposes only. This reportwas based on certain assumptions and information available to Hubs at the date of
publication. Hubs does not give an express or implied warranty regarding the correctness
or completeness of the information contained in this report. This report may containforward-looking statements. There is no guarantee that future results, levels of activity,
performance or achievements will be realized. You should not place undue reliance onthese forward-looking statements. Hubs expressly disclaims any intent or obligation to
update any forward-looking statements to reflect subsequent events or circumstances.
The information provided by collaborating companies has not been verified by Hubs.
The image rights remain with the respective originator at any time. Hubs expresses
disclaims any and all liability and will not be liable for any loss or damage arising directly
or indirectly (including special, incidental or consequential loss or damage) from your useof this report, howsoever arising, including any loss, damage or expense arising from, but
not limited to, any defect, error, imperfection, fault, mistake or inaccuracy in this report,
its contents or associated services.

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

38 / 41

References

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

39 / 41

[01] Building a Resilient Supply Chain
Harvard Business Review, August 14, 2007.
[02] Sheffi, Yossi. The Power of Resilience
MIT Press, 2015.
[03] Coronavirus Is Proving We Need
More Resilient Supply Chains
Harvard Business Review, March 2020.
[04] Coronavirus Bankruptcy Tracker:
These Major Companies Are Failing Amid
The Shutdown Forbes, May 3, 2020.
[05] Ford’s Risk Management Lessons
Industry Week, May 29, 2018.
[06] Building Resilience In Complex
International Supply Chains FM Global,
Feb. 12, 2020.
[07] The Evolution of Resilience in Supply
Chain Management: A Retrospective on
Ensuring Supply Chain Resilience
Journal of Business Logistics, March 2019.

[18] Global supply chains buckle as virus
variants and disaster strike.
Reuters. July 23, 2021.
[19] Sever winter weather in Texas will
impact many supply chains beyond chips.
Forbes. Feb 19. 2021
[20] Natural disaster H1 insured losses hit
10-year high-Aon. Reuters. July 21, 2021.
[21] 2020 Cyber Readiness Report, Hiscox.
[22] Ninth Annual Cost of Cybercrime Study
Accenture, March 6, 2019.
[23] The cost of the Suez Canal blockage.
BBC, March 29, 2021.
[24] The global supply chain nightmare isabout to get worse. CNN, October 2021.
[25] Coronavirus impact by Industry
Statistica.

[09] Supply Chain Risk 2020: New Worries
SCM World Future of Supply Chain surveys.
October 2017.

[26] An interactive web-based dashboard
to track COVID-19 in real time. The Lancet.
February 2020. Published online at
OurWorldInData.org. Retrieved from:‘https://ourworldindata.org/covid-cases’.
[27] Why We’re in the Midst of a Global
Semiconductor Shortage.
Harvard Business Review, February 26, 2021.

[10] Trade War Manufacturing
Google Trends.

[28] Deloitte’s second biennial global costsurvey. Deloitte, April 2019.

[11] Future of Supply Chain: Reshaping
the Profession. Gartner, November 2019.

[29] Gartner Forecasts Worldwide
Hyperautomation-Enabling Software Market
to Reach Nearly $600 Billion by 2022.
Gartner, April 28, 2021.

[08] Annual Risk Report 2021
Everstream Analytics Annual Risk Report.
March 2021.

[12] Supply chain risk management is back.
McKinsey&Company Jan. 28, 2020.
[13] Stuck in Kent: How Brexit Red Tape
Choked Cross-Border Trade.
Bloomberg, January 15, 2021.

[30] High-tech in production
Volkswagen, June 11, 2019.
[31] How GE Applies Lean Startup Practices
Harvard Business Review, April 23, 2014.

[14] How serious is the shortage of lorry
drivers? BBC, October 15, 2021.
[15] Toyota profits plunge after earthquake
disruption BBC, August 2, 2011.
[16] Nissan and BMW car production hit byvolcano disruption
The Guardian, April 20, 2010.
[17] Billion-Dollar Weather andClimate Disasters NOAA.

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

40 / 41

Supply chain resilience report 2021 update
Copyright © 2021 3D Hubs B.V.
All rights reserved.

Supply chain resilience
report 2021 updatepress@hubs.com
www.hubs.com

EU +44 20 3966 9208
US +1 845-402-8321

41 / 41