Building Supply Chain Resilience: From Just-in-Time to Just-in-Case

After the pandemic, geopolitical and climate risks dominate

Uncertainty stemming from the ongoing war in Ukraine — along with tariffs and economic concerns — continues to weigh on the global supply chain, complicating the outlook for demand.

Meanwhile, uncertainty has grown among policymakers and business leaders about the risks of over-relying on single markets. Escalating geopolitical risk is adding to concerns over having concentrations of resources and technologies in one market or region, such as the dominance of semiconductor producers in Taiwan.

The ongoing friction between Beijing and Washington over trade and tariffs has amplified uncertainty and pressure. However, companies that have already navigated five years of polycrisis have proven to be better equipped to adapt. Although apprehension is hindering investment decisions in some cases, conversations are still taking place.

"The persistent geopolitical uncertainty significantly impacts investment decisions, with some segments cautiously preparing for the future while others make bold investment moves," says Michael Burg, executive vice president and managing director, Manufacturing practice at Gallaher. "The next 12 to 18 months will be critical as businesses navigate these challenges and uncertainties."

"Clients are discussing nearshoring some of their supply chains. US companies are nearshoring China-based operations into locations such as Mexico or moving to other Southeast Asian manufacturing hubs," says Adam Carrier, head of Consulting at AnotherDay, a Gallagher company.

The pressure to adapt also stems from climate change, which is disrupting supply chains in ways that are just as far-reaching. Across continents, a hotter planet is already buckling roads, bending rail lines, grounding airplanes and rerouting vessels.

Add to the mix that extreme heat affects labor productivity. "This may result in lessened production volume as factory or outdoor working conditions become more challenging to maintain targeted output levels," notes Steve Bowen, chief science officer at Gallagher Re.

Before the pandemic, manufacturers and consumers generally took the global supply chain for granted due to its efficiency and reliability. However, the disruptions of the last five years demonstrate that a problem in one place tends to travel far and fast.

The takeaway for companies is to adopt diverse solutions informed by risk experts who can see the whole forest, not just the tree.

How businesses switched gears

A widely accepted notion is that uncertainty is bad for business. Elevated uncertainty often manifests itself as delivery-time variability and sourcing risk, prompting companies to hold extra inventory, source from multiple suppliers or regionalize their supply chains.

When COVID-19 began to subside, businesses that had over-ordered were left with warehouses full of excess inventory they couldn't use or sell. Yet, amid the excess, "some firms demonstrated remarkable agility," says Doug Simons, area executive vice president, Commercial Insurance at Gallagher, recalling a machine shop that makes precision aerospace parts and had developed business continuity plans years before the pandemic.

The company had mapped out alternative suppliers and explored other industries beyond aviation. As a result, it began producing wristwatches and components for medical devices. "They were able to adapt and gain an understanding of the medical field, which now accounts for 30% of their business, compared to 100% aerospace before," says Simons.

Companies within the food and agribusiness sector were also able to pivot. "A food manufacturer packaged its food products in 50-pound containers destined for schools. With schools shut down during COVID, the company pivoted to 1-pound packages, redirecting its supply to grocery stores," describes Glenn Drees, managing director, Food and Agriculture at Gallagher.

In the Gallagher survey, 78% of the business leaders reported changes in their business revenue makeup since the pandemic, with more than a third revealing that their companies had to explore new, unplanned revenue streams due to the pandemic lockdowns. These impacts have had long-lasting impacts on global supply chains.

Business continuity planning is a critical part of supply chain resilience. It helps organizations identify vulnerabilities, model scenarios and prepare financially by estimating income, expenses and potential losses in the event of a disruption. "How do you plan for a million dollars of business income when you don't know how long you'll be shut down?" Simons asks.

"Those are difficult conversations, but having them early makes all the difference," says Simons. "Business income is the lifeblood of a company. You can be slightly off on your contents or storage efficiency, but business income is what will keep your business afloat in the event of a loss. I consider that limit critical to survival."

Uncertainty in supply chains isn't going away. "After the public health impact, you could describe COVID as a 'supply chain event'," Drees says. "Due to the impact of COVID on the supply chain, the way companies think about and respond to supply chain disruptions has evolved. Companies' experience in adapting operations to maintain continuity during disruptions, combined with their willingness to seek guidance from risk professionals, has made them more resilient."

Today, the push to cultivate or expand domestic industries in the US is again testing the resilience and adaptability that carried firms through the pandemic. Meanwhile, the trend toward onshoring and nearshoring supply chains continues.

The World Bank warns that record-high trade policy uncertainty and sharp tariff increases have disrupted global value chains, raising input costs and delaying investment decisions.¹ Businesses face costly and time-consuming supply chain adjustments, as the "substitution toward domestic alternatives is slow, expensive and not feasible for all products."

"A common concern among business leaders is that realigning with US suppliers is a complex process that could take years to implement fully," says Burg. "If there were a sudden reversal in tariff policies, much of that investment could be rendered futile. Without a clear understanding of what will happen around tariffs, businesses are hesitant to make significant investments in large-scale production facilities within the US."

Drees often reminds clients that the resilience built during the pandemic has already equipped them to respond to trade disruptions with agility. He shares the example of a recent conversation with a client concerned about tariffs and importing machinery, during which he told the client, "You've already solved for this." When they looked puzzled, he explained: "We all went through COVID, which was essentially a supply chain event. Whether it's tariffs or shipping delays, it's the same kind of challenge. So let's treat it like a supply chain issue and solve for that."

That kind of reframing can be powerful. As Drees puts it, "brokers can be that person to help companies reorient their thinking to support them in managing risk effectively."

A recipe for construction — a bellwether of the broader economy

Much like the manufacturing sector, the construction sector demonstrated resilience in response to the polycrisis." People within the construction sector are accustomed to solving problems and moving forward, which is the essence of building things. They are practical and pragmatic individuals," says Tracy Keep, managing director, National Construction practice Group at Gallagher UK Retail.

The pandemic and the subsequent disruptions it brought forced construction firms to operate in an unpredictable climate and with soaring material costs. Many construction firms re-sequenced their work schedules to comply with strict distancing measures, which delayed building timelines worldwide.

The sector's response to these pressures was swift. For example, globally, 35% to 40% of construction projects since 2020 have incorporated escalation clauses (which allow contract prices to adjust for material cost spikes) and force-majeure provisions (which excuse delays caused by extraordinary events, such as pandemics).

"For UK construction clients juggling the rising cost of materials and impact of Brexit, the fallout from the Grenfell Tower fire disaster further compounded the challenges," explains Keep. Anticipating sizable claims relating to cladding, insurers pulled back on capacity for contractors' professional indemnity, and the cost of insurance rose dramatically.

The construction industry has long operated on tight margins and strict timelines, but the polycrisis era exposed just how fragile those models could be. Prices for key materials like steel and timber soared overnight, with one supplier reporting a 1,500% increase in a single day. For firms locked into fixed-price contracts, insolvency loomed.

The onus was on brokers during this period to find creative solutions and explain the challenging market dynamics to clients who were feeling the pressure.

The UK construction sector has seen significant movement toward more localized supply. "It's a matter of economic viability," says Keep. "With uncertainty around tariffs and import taxes from Europe, reopening domestic manufacturing for building materials, which was closed down decades ago, now seems more viable."

According to Keep, one thing holds true: "Construction often serves as a barometer for the economy. Historically, when uncertainty begins to ease, this sector is among the first to regain momentum, helping to lead broader economic recovery."

Published January 2026

Sources

¹Adarov, Amat, et al. "Global Economic Prospects — June 2025," World Bank Group, 10 Jun 2025. PDF file.

²Finck, David, and Peter Tillmann. "The Macroeconomic Effects of Global Supply Chain Disruptions," SSRN, 6 Feb 2023.