The closure of the Strait of Hormuz has had an impact extending well beyond world petroleum supplies, says Weston Drake, principal with Sea Cliff Consulting.

The closure of the Strait of Hormuz is impacting the supply of oil on a global scale, Drake says. Even in the U.S., which has not been an importer of oil, global prices impact the cost of the commodity and petroleum production.

Beyond that immediate effect on oil, the crisis is affecting overall logistics costs and creating a need for sophisticated routing and lane optimization tools for carriers. More specifically, there’s been an impact on the cost and availability of resin-based products, aluminum and many other basic materials.

Further up the supply chain, companies are needing to make tradeoffs in their inventory and safety stock strategies. When it comes to resin-based materials, for example, they need to be considering their working capital needs as such items become more expensive to store, versus the need to have product immediately on hand to fill customer orders.

The procurement function is especially subject to big changes in global business. Heavy divestiture activity in the consumer products sector creates disparate pockets of data as companies stitch together, then pull apart, acquisition targets. They must possess detailed knowledge of their vendor relationships in order to adjust sourcing strategies in response to any number of economic and geopolitical events.

Artificial intelligence is making that task easier, faster and more sustainable, Drake says — but only if the technology is applied correctly. Provided that an organization has a clear sense of its supply and demand signals, it can deploy AI to anticipate economic trends and even produce purchase orders in line with immediate requirements.