The digitalization of South Korea's cross-ministerial integrated supply chain Early Warning System (EWS), which the government has pursued to proactively respond to supply chain crises, is expected to face delays. Construction work was halted after last year's fire at the National Information Resources Service data center, making the full operation originally planned for the second half of this year effectively unattainable.
According to the Ministry of Economy and Finance on Tuesday, the cross-ministerial integrated supply chain EWS digitalization system is unlikely to enter full operation this year. "We originally planned to officially operate the digitalization system in the second half of this year, but construction work was halted after last year's data center fire," a ministry official said. "Since work has resumed this month, our goal this year is not full operation but a pilot run within the year."
The supply chain EWS was introduced following the urea water shortage in November 2021. At the time, China's tightened export inspections on urea triggered concerns over a shortage of vehicle-use urea solution and logistics disruptions, prompting the government to announce the activation of an early warning system covering some 4,000 items.
However, the existing EWS relied on manual checks and information sharing by individual ministries, limiting its real-time analysis and security functions. To address these shortcomings, the government launched the construction of a cross-ministerial integrated computing network. In July last year, a kickoff meeting was held with 19 ministries related to supply chains, presenting a plan for pilot operation by the end of 2025 and full operation in early 2026.
The schedule has been pushed back from the original plan. The Finance Ministry's 2026 performance management implementation plan specifies "pilot operation of the cross-ministerial integrated supply chain EWS digitalization system within the year" as its fourth-quarter plan. The goal has been adjusted from full operation at the start of the year to pilot operation at the end of the year.
The budget has decreased to 492 million won ($340,000) this year from 1.874 billion won last year, as the system moved from construction, which was reflected last year, to the maintenance and management phase.
The problem is that supply chain risks are growing larger. With energy supply instability mounting from the recent Middle East war, combined with China's export controls on key minerals such as rare earths and tungsten and changes in major countries' tariff policies, supply chain management has emerged as a national economic security issue. Analysts warn that failing to detect anomalies in individual items in a timely manner could delay initial responses, and even small supply disruptions could spread into production cost burdens across entire industries.
In particular, supply chain risks are shifting from temporary shocks to subjects of constant management. In a recent report, the Korea Institute for International Economic Policy (KIEP) analyzed that through Japan's export restrictions, COVID-19, the Russia-Ukraine war, and technology controls, supply chain risk levels have transitioned to a structure that does not fully return to previous states but remains and accumulates. With new risks emerging in 20% to 25% of imported items every month, the importance of a digitalized system that can identify anomalies in specific items early has increased, the report explained.
Delays in digitalization are not merely a matter of system construction scheduling but can lead to response time gaps. If the existing EWS continues to rely on manual checks and information sharing by individual ministries, even when a specific country imposes export controls or logistics disruptions occur, reviews of item-by-item impact and alternative import sources will inevitably be delayed. If instability in the supply of raw materials and intermediate goods is prolonged, companies will bear the burden of securing inventory and detour procurement costs, which ultimately translates into upward pressure on production costs.
Experts believe that a blockage in even one item among key minerals, energy, and intermediate goods could spread shocks across strategic industries such as semiconductors, batteries, and defense. Chung Hyung-gon, senior research fellow at KIEP, diagnosed in a recent report that "supply chain risks have not disappeared but are accumulating in the form of costs, and can expand rapidly if additional shocks arrive."
The Korea Institute for Industrial Economics and Trade (KIET) also viewed that Middle East risks may not be limited to crude oil and liquefied natural gas (LNG) but could spread to supply of industrial materials such as naphtha and anhydrous ammonia. "The early warning system must be advanced to include not only crude oil and LNG but also energy-linked industrial materials such as naphtha and anhydrous ammonia," said Bing Hyun-ji, a research fellow at KIET.
