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Risk in Context

Are You Keeping Track of Your Supply Chain?

Posted by David Tate 19 August 2019

Traditional supply chains and their processes today are experiencing unprecedented change. This has been stimulated by a number of global factors, including an unstable political and economic environment, extreme weather, evolving consumer preferences, and the considerable shift towards automation and digitalisation.

The need for resilience and the importance of visibility within the supply chain cannot be ignored, as retailers and food manufacturers face the constant prospect of supply chain disruption. This can affect supply chains at any time, as witnessed with shortages of courgettes and aubergines following extreme weather on the Continent [1], and with the CO2 shortages [2] last year. These large-scale events demonstrate a lack of agility in the supply chain; with the UK's possible exit from the EU still on the horizon, this serves as a reminder to be prepared for whatever the future holds.

Review Existing Arrangements

The journey from manufacturer to customer is becoming increasingly complex. Many firms are now realising that they have very little control over the entire supply chain. Some companies [3] are looking to technology and to blockchain to improve transparency in supply chains — although as technology becomes more embedded within businesses, this could pose a new set of risks.

Future‐proofing the supply chain is therefore about being able to continuously model and test those 'what if' scenarios. Mapping the entire supply chain is essential to determine where there are sole-source and single-source suppliers, including tier II and tier III suppliers, as well as noting key transportation dependencies and facilities. Identify specific points of potential failure by asking:

  • What are the aggregation values on ships or with shipping companies?
  • What could give rise to a supply disruption, for example, supplier insolvency, a strike at a supplier, utility failure, major event at a port, shipping insolvency or the political environment?
  • How long could such a disruption last?
  • At what point would this disruption begin to affect your output?
  • What steps would you expect to take to address the disruption?

Of suppliers:

  • Where does their supply originate?
  • How long have they been supplying you?
  • What is the main mode of transportation for the supply?
  • What are the back-up plans of your suppliers and vendors?

Furthermore, alterations to current arrangements will invite additional risks; these should be identified at every stage in the process. Risks could include technology, impacts on workforce, additional administration costs, and legal issues.

Taking steps to build resilience into the supply chain can protect revenue, market share, and ultimately a company's reputation.

David Tate