Regulation Sourcing Strategies Supply Chain Management

Powering through sanctions: how to ensures stability in difficult supply chains

In recent weeks, the USA has intensified its stance against Russia. Numerous organisations, individuals, and companies, including Mornsun, a provider of power supply solutions and DC/DC converters, are now subject to strict US sanctions.

Sebastian Fischer, Co-CEO of the Traco Power Group answers questions on the impact of these sanctions.

What impact could these measures have on supply chains?

The USA has indeed stepped up its stance against Russia, and many organisations, individuals, and companies, including Mornsun, are now facing strict US sanctions. These sanctions could significantly disrupt supply chains, especially in industries that rely on power supply solutions for industrial applications. The export blockade of Mornsun products will likely lead to delays and cost increases. Affected companies must immediately find trustworthy alternative products, which can lead to high costs and logistical challenges. In the long term, this could result in the diversification and geographical relocation of supply chains to mitigate the risk of trade restrictions.

How severely are European companies affected by the new sanctions?

Currently, the sanctions primarily affect the US market. However, European companies are also impacted if their products are used in the USA or contain components from sanctioned firms. Companies affected by US sanctions risk becoming non-operational due to global payment blockades. Often, US sanctions are quickly adopted by the EU and Switzerland, banning the import of the affected components. Therefore, European companies will likely face similar consequences as US companies: critical components will no longer be available, and alternatives must be found swiftly to keep production running.

How does Traco Power ensure compliance with the sanctions, and what impact do these sanctions have on the company?

The sanctions highlight the severe consequences of violations, particularly for the customers of the sanctioned companies who suddenly lose access to essential components. Since February 28, 2022, Traco Power has halted all deliveries and business relations with Russia, including through third countries. We strictly adhere to our embargo policy and dual-use product regulations, ensuring compliance with all relevant embargo and export control laws. The sanctions have no direct impact on Traco Power. We focus on assisting affected companies with replacement products and technical support to bridge the supply gap.

How has the concept of second source developed following the supply chain disruptions caused by the COVID-19 pandemic?

The COVID-19 pandemic has starkly revealed the vulnerabilities of global supply chains, significantly increasing interest in the second source concept. Many companies have revised their procurement strategies to reduce dependence on single suppliers, leading to a broader diversification of their supplier base and a stronger emphasis on local sourcing.

How should companies strategically manage the second source process, particularly regarding technical aspects, certifications, and procurement?

Establishing second sources is crucial for stable supply chains, even though it requires additional effort. Companies should first identify potential, technically competent, and reliable suppliers through a comprehensive market analysis. Local partners offer advantages such as shorter delivery times and reduced logistical risks. Technical aspects and certifications are vital; new suppliers must meet existing quality standards, which may require training and technical adjustments. Contracts should provide flexibility and scalability, with clauses ensuring quality and delivery capabilities. Using modules instead of discrete solutions can also help reduce compliance efforts.

How does Traco Power support its customers and partners in overcoming the challenges posed by the sanctions?

Traco Power proactively supports affected companies by offering over a thousand alternative products that are immediately available and ready to use. This product range allows companies to seamlessly switch to reliable and high-quality solutions without compromising on performance or availability. Our commitment to the motto ‘We deliver what we promise’ is evident in our constant readiness to support our customers, even in challenging times, and maintain the stability of their supply chains. As a provider of power supply solutions, Traco Power has proven to be a reliable partner through forward-looking planning and typical Swiss virtues such as high reliability, availability, and trustworthiness, both in good times and in crises.