Critical Resource Dependencies Demand Volatility of European Supply Chains

CRITICAL RESOURCE DEPENDENCIES & DEMAND VOLATILITY OF EUROPEAN SUPPLY CHAINS This industrial brief, as part of the ReSChape project, presents how geopolitical shocks, climate events, and shifting consumer behaviour are exposing structural vulnerabilities in European supply chains, from upstream sourcing to last mile delivery. The brief highlights dependencies on nonEU suppliers, logistical chokepoints, regulatory disruptions, and urban logistics strains, alongside the rising complexity of e-commerce demand. It concludes with priorities for policy makers and companies to enhance supply chain resilience. SEPTEMBER 2025 PROJECT PARTNERS page 2 INDUSTRIAL BRIEF Introduction The European supply chain ecosystem is continually challenged by a combination of critical resource dependencies and volatile, fast-paced shifts in consumer demand. Global disruptions such as the COVID-19 pandemic, the war in Ukraine, or the recent tariff conflicts between the USA and the EU have exposed the fragility of European supply chains. Simultaneously, changing consumption patterns fuelled by a shift to E-Commerce and changing societal values disrupt demand predictability. All this strains the logistics systems of European supply chains. Addressing these interlinked risks and mega-trends demands strategic coordination at both policy and corporate levels. European industries depend on international suppliers, especially concerning critical raw materials (CRMs), predictable customer demand, stable trade relations as well as reliable logistics infrastructure. External shocks – geopolitical, climate-related, or market-driven – lead to severe deterioration of supply chains so that even production and/or transports halts and consequently costs spikes, and service quality declines. To counter these external challenges, European companies should seek to improve the resilience of their supply chains in two strategic areas to • managing upstream vulnerabilities such as transport chokepoints, sanctions and import tariffs as well as further supplier-based risks, and • responding to downstream pressures such as increased demand volatility, last-mile inefficiencies and export tariffs. An analysis of the key issues to be addressed is a prerequisite for defining policies and strategies for supply chain resilience. Importance for European Supply Chains page 3 INDUSTRIAL BRIEF Analysis Approach The ReSChape project team has performed a systematic and comprehensive analysis of key horizontal issues to capture both vulnerabilities and disruptions most relevant for European supply chains. This analysis drew on frameworks such as the Supply Chain Knowledge Framework by Christopher and Peck, the SCOR model of the Association of Supply Chain Management, and the SCM Task Model developed by Fraunhofer IML. A total of 127 supply-chain-related risks and 48 coded references from national and EU-level policy documents were identified. The research combined a structured review of policy papers, stakeholder position documents, expert interviews, and an online survey covering multiple EU member states. The objective was to detect cross-sectoral risk patterns, uncover implementation gaps, and extract actionable insights to support resilience-building strategies and policies for European supply chains. Identified Horizontal Issues European supply chains of all sectors are faced with the following challenges for the sourcing of materials and parts and the distributed of finished goods: • Dependency on suppliers from regions outside of the EU: especially sourcing from China, Russia, and the Ukraine had led multiple times to severe material shortages for European companies. Production was halted, additional costs occurred, and revenue was lost. • Strategic routes like the Suez Canal or the trade route around the Horn of Africa pose systemic risks in global logistics: these transport chokepoints were blocked several times leading to substantial longer lead times or higher costs due to airfreight when sourcing material from to Asia or shipping goods through these routes. • Tariffs and sanctions both disrupt the up-stream and down-stream side of supply chains: the disruptions are particularly severe if these are issued at short notice. • Climate change related risks have increased the frequency of heatwaves, floods, and storms which disrupt infrastructure and thus decreases delivery reliability. • Driven by lifestyle trends and e-commerce, demand is increasingly short-lived and fragmented: especially in fashion and electronics, accelerated obsolescence intensifies material use and waste. • Direct-to-consumer models complicate logistics and inventory strategies of many finished goods producers and threating the business model of companies in the retail sector. • The complexity of urban and last-mile logistics is heightened by short delivery cycles that outpace infrastructure readiness, thereby stressing urban systems and contributing to increased emissions. page 4 INDUSTRIAL BRIEF Stakeholder Positions For the development of supply chain policies and strategies we compiled the position from four major stakeholder groups: The private sector operating supply chains, non-government organizations, labour unions as well as European Technology Platforms (ETP) and European Institute of Innovation & Technology (EIT). The private sector stresses the importance of nearshoring, supplier diversification, and strategic autonomy to mitigate risks associated with geopolitical and environmental shocks. It underscores the need for enhanced demandsensing capabilities and agile inventory systems to effectively respond to volatile market conditions. Additionally, there is a call for EU funding to bolster green infrastructure, digital transformation, and circular business models. However, the representatives of the private sector criticize existing economic incentives that prioritize short-term consumption and rapid delivery, arguing they undermine longterm sustainability efforts. Labour unions advocate for local production, strategic stockpiling, and circular practices to lessen vulnerability to external disruptions. They urge a transition away from profitdriven supply chain models that contribute to instability and environmental damage. Furthermore, unions emphasize the necessity of fair labour conditions, regulatory oversight, and the involvement of workers in developing industrial policies that shape economic transitions, ensuring that the workforce has a say in the changes that affect their livelihoods. NGOs demand enhanced consumer guidance through transparent product information, sustainability labelling, and regulations on digital marketing. They advocate for stronger environmental and human rights protections within global supply chains, emphasizing the need for access to justice and support for Indigenous communities. Additionally, NGOs promote the right to repair, durable product design, and the freedom of repair choice as essential strategies for fostering sustainable consumption and reducing waste. ETP and EIT recommend investing in predictive analytics, smart logistics, and localized production infrastructure to enhance supply chain resilience. They encourage the integration of energy infrastructure, such as hydrogen and electricity, alongside collaborative logistics models to optimize operations. Furthermore, they stress the importance of digital standards, consumer engagement tools, and urban logistics solutions in tackling delivery pressures and improving transportation efficiencies, ultimately leading to a more robust and sustainable supply chain system. 12 34 page 5 INDUSTRIAL BRIEF Expert Consultations and Survey Feedback Additional input on key supply chain issues was gathered through an online survey and interviews with experts, mostly from supply chain operations. Administrative burden remains a significant concern for SMEs, leading experts to recommend standardized reporting frameworks and digital compliance tools to ease the load. There is a strong demand for improved infrastructure, particularly in areas such as battery recycling, smart logistics, and alternative energy networks. Furthermore, experts advocate for the establishment of EU-wide KPIs and institutional bodies to effectively monitor supply chain resilience and sustainability. However, stakeholders criticize major retail platforms for promoting unsustainable consumer behaviour through tax advantages and hyper-fast delivery models. In response, some companies are beginning to offer eco-friendly delivery options and employ agile inventory strategies to better manage demand peaks. Nonetheless, experts express concerns about the practical feasibility of current EU regulations, particularly regarding implementation by SMEs and maintaining global competitiveness. Additional barriers include limited access to finance for SMEs, regulatory complexity, and a lack of transitional policy support. page 6 INDUSTRIAL BRIEF Invest in strategic autonomy through CRM independence, diversified sourcing, and robust infrastructure. Conclusion and Implications Resource dependencies and volatile consumer demand present a compound risk to the stability and competitiveness of European supply chains. Without integrated governance, strategic foresight, and modernised infrastructure, these vulnerabilities will continue to undermine economic resilience, climate goals, and social cohesion across the EU. To counter these threats, European institutions and businesses should: Strengthen adaptive logistics and deploy advanced digital tools for real-time demand forecasting. Support the creation EU-wide predictive tools for logistics infrastructure monitoring. Establish unified KPI frameworks and cross-sector monitoring bodies. Promote consumer awareness and incentivise sustainable purchasing and delivery behaviours. Expand financial and advisory support to SMEs to ensure inclusive resilience. Future-ready supply chains must align technological innovation with policy coordination, environmental responsibility, and the evolving expectations of society. Only through systemic adaptation can Europe ensure long-term competitiveness in a volatile global environment. Strategic foresight methods, increased supply chain digitalisation as well as the pursuit of circular economy principles are generic levers to reinforce supply chain robustness to confront external risks and threads. page 7 INDUSTRIAL BRIEF Selected References • Abdallah, K. S. and El-Beheiry, M. M. (2022). The effect of planning horizon and information sharing on the optimisation of the distribution network of a fast-moving consumer goods supply chain,” Journal of Transport and Supply Chain Management, vol. 16, no. 0, p. 788. • Abolghasemi, M.; Beh, E.; Tarr, G.; Gerlach, R. (2020). Demand forecasting in supply chain: The impact of demand volatility in the presence of promotion. Computers & Industrial Engineering, Volume 142, 106380. • BusinessEurope (19/07/2022). EU-China relations - Engaging with a systemic rival. https:// www.businesseurope.eu/publications/eu-china-relations-engaging-systemic-rival • BusinessEurope (19/06/2023). The Right to Repair proposal - a BusinessEurope position paper. https://www.businesseurope.eu/sites/buseur/files/media/position_papers/legal/2023-06-19_pp_ right_to_repair.pdf • BusinessEurope (16/10/2024). BusinessEurope statement on the EU Regulation on Deforestation-Free Products (EUDR). https://www.businesseurope.eu/sites/buseur/files/media/ position_papers/rex/2024-10-16_businesseurope_statement_on_eudr.pdf • Christopher, M.; Peck, H. Building the resilient supply chain. International Journal of Logistics Management, Vol. 15, No. 2, pp1-13, 2004 • Consumers International (16.01.2023, Policies and Practices). E-commerce and Product Sustainability Information: An overview of policies and practices. https://www. consumersinternational.org/media/451295/overview-of-policies-and-practices.pdf • Deloitte & BDI (2024). Supply chains and margins under pressure – technology as a beacon of hope. Supply Chain Pulse Check. (2024). https://www.deloitte.com/content/dam/assetszone2/de/de/docs/industries/energy-resources-industrials/2024/Supply%20Chain%20Pulse%20 Check%202024-Deloitte_EN.pdf • ETUC (28.10.2020). ETUC Position on EU Trade Policy Review. https://etuc.org/sites/default/ files/document/file/2020-11/ETUC%20position%20on%20EU%20trade%20policy%20review%20 adopted%20updated%20%282%29.pdf • Nettsträter, A., Geißen, T., Witthaut, M., Ebel, D., & Schoneboom, J. (2015). Logistics software systems and functions: an overview of ERP, WMS, TMS and SCM systems. Cloud computing for logistics, 1-11. • Tao, H.; Sun, X.; Liu, X.; Tian, J. and Zhang, D. (2022). The impact of consumer purchase behavior changes on the business model design of consumer services companies over the course of COVID-19,” Front Psychol, vol. 13. DISCLAIMER The sole responsibility of this document lies with the ReSChape project. It does not necessarily reflect the opinion of the European Union. The European Commission is not responsible for any use that may be made of the information contained herein. Follow usContact information email: [email protected] website: www.reschape.eu This project has received funding from the European Union’s Horizon Europe research and innovation programme under grant agreement No. 101061729.