In the nine weeks since the start of the Iran conflict, the number of scenarios being run by Kinaxis’s customers jumped 121 per cent compared with the previous nine-week period, Fabrizio Brasca said.
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Businesses will continue to suffer the effects of the Iran war long after the Strait of Hormuz is reopened for commercial shipping, a senior executive at supply-chain management software maker Kinaxis says.
“You’re talking about 20 per cent of the world’s oil going through that particular strait, let alone the natural gas impact,” Fabrizio Brasca, the Kanata-based firm’s senior vice-president of market strategy, told OBJ in an interview late last week. “Closing that right off, that’s an incredible level of disruption in the supply chain.”
Brasca’s remarks come as the U.S. tries to force open the Strait of Hormuz amid a fragile ceasefire in a conflict that has raged since Feb. 28, when the U.S. and Israel first attacked Iran.
That prompted Iran to close the strait, a key shipping lane through which about one-fifth of the world’s oil and natural gas typically passes, along with fertilizer and other products derived from petroleum.
Fuel prices have skyrocketed as a result, creating havoc for manufacturers in a wide range of industries from chemicals to food processing, Brasca said.
Rising energy prices have driven up the costs of shipping raw materials and any components that contain petroleum, he added, while the closure of the waterway means companies have had to figure out new routes to receive many of the items they need to make their products.
Any shipping delays can trigger a domino effect throughout the supply chain, Brasca explained, requiring businesses to reallocate manufacturing capacity and reassess the risks involved in acquiring certain materials.
“The effects are far-reaching and compounding as they expand across these industries,” he said. “Any industry in particular that is focused on just-in-time (delivery and) trying to minimize inventory levels, all of those are immediately impacted. They have to be able to plan around that and account for the continued delays.
“Even if (the strait) opens tomorrow … these things will take a while to rebound. It’s almost like you have to just assume it’s going to stay closed until there is a very extended, protracted opening and ceasefire.”
Few companies probably understand the ramifications of events such as the Iran war better than Kinaxis.
The publicly traded company sells its AI-powered software to businesses including Unilever, Procter & Gamble, Ford and Subaru. Major manufacturers around the world in sectors from automotive to health care use its platform to organize their supply chains and forecast how they will be impacted by future economic, trade and supplier changes.
In the nine weeks since the start of the Iran conflict, the number of scenarios being run by Kinaxis’s customers jumped 121 per cent compared with the previous nine-week period, Brasca said.
“It’s constant scenario analysis. What do I do? How do I reroute inventory? What are my alternatives? It’s a constant need to be able to proactively come up with mitigation plans.”
Brasca said the Iran war is just the latest in what seems like a never-ending chain of disruptive events that have upended supply chains since the COVID-19 pandemic began six years ago.
Kinaxis saw a spike in demand for its software throughout the COVID crisis. Usage of its platform boomed again when U.S. President Donald Trump began threatening to impose major tariffs on imported goods at the start of 2025.
Now, the cycle is repeating itself as the conflict in the Middle East throttles the global economy.
“We used to refer to them as black swan events,” Brasca said of situations like the pandemic and the Iran war. “But that’s really not the case anymore. This type of disruption has become structural. Generally, now it’s a constant stream of something. We live in a world where a TikTok video can empty a shelf. This is a constant thing that our customers are dealing with.”
Kinaxis’s software has evolved significantly over the past few years as supply-chain challenges have become more pronounced, he added.
For example, it now features AI agents that can answer specific questions, such as how a rise in the price of oil to $150 a barrel could potentially affect shipping costs and other aspects of the manufacturing process.
“That’s exactly the type of thing that our customers would be doing,” Brasca said, noting the software’s AI tools are “getting more and more sophisticated” all the time and are constantly learning as they gain new data from real-life events.
“You have to think of (AI agents) almost as an extension of your workforce,” he said.
Asked if he had any advice for companies grappling with supply-chain disruptions, Brasca stressed that it’s essential to act quickly before issues spiral out of control.
“Speed matters,” he said. “Your ability to analyze proactively at a very rapid pace to understand impacts of things is becoming more and more important. It’s not just about this one event. It’s about all the things that are impacting our supply chains consistently.
“It’s now structural, not cyclical. It’s constant. Making sure that your processes, your playbooks, all of those things, are designed in such a way that you can be proactive. That’s not just technology – it’s also about people and processes. It’s a three-legged stool.”
