Tag Archive: supply chain risk

Risk in Global Supply Chain Is on the Rise

December 13th, 2016
supply chain performance

With supply chain risk at its highest since 2013, what are you doing to manage risk to minimize interruptions and interference with business?

According to the Chartered Institute of Procurement and Supply (CIPS) risk index, risk is the highest since 2013. It is easy to become complacent. Are you adding risk into your supply chain conversations and plans?

The increase is driven by supply chain risk in Western and Central Europe, Eastern Europe, the Middle East, Latin America and Sub-Saharan Africa. Specifically:

  • Western Europe – This trend is clearest in Western Europe, where risk rose to 2.63 in Q3 from 2.60 in the previous quarter. The uncertainty around the post-Brexit relationship between the UK and the European Union has had a negative impact on trade and business sentiment in the UK and across the region.
  • North America – North America remains static at 2.101, but both Canada and the USA have seen trade agreements with the European Union stall this quarter.
  • Eastern Europe and Central Asia – In Eastern Europe and Central Asia, risk has risen to 5.424 from 5.396, following a failed coup in Turkey which is likely to see an increase in interference with businesses.
  • Middle East and North Africa – Supply chain risk has also deteriorated in the Middle East and North Africa from 4.406 in Q2 to 4.413 in Q3, where civil war has all but eliminated international supply chains in certain countries.
  • Sub-Saharan Africa – Sub-Saharan Africa continues to have the world’s highest levels of supply chain risk, increasing further from 5.544 to 5.558 with Nigeria slipping into technical recession and South Africa narrowly avoiding one.
  • Asia Pacific & Australia – Asia Pacific has bucked the trend this quarter with supply chain risk decreasing marginally from 3.424 in Q2 2016 to 3.415 in Q3. Australian suppliers, in particular have benefited from rising coal and iron ore prices together with an increase in national defense spending.
  • East Asia – Elsewhere in Asia, logistical routes have come under pressure. Super typhoon Meranti has caused disruption to flights, ports, rail schedules and power supplies in Taiwan. Winds of 150km/h have forced the temporary closure of two nuclear power stations but the country’s robust building code has mitigated against long-term disruptions.
  • South Korea – In South Korea, meanwhile, the world’s 7th largest shipping company, Hanjin Shipping, went bankrupt in August, reducing global shipping capacity by 3% and leaving a cargo as large as $14bn unable to dock. The bankruptcy is likely to have wide-ranging impact on trans-Pacific and Asia-Europe supply chains

Since your extended supply chain likely relates to one if not several of these geographies, it is worthwhile to make sure you stay on top of what’s important. For example, those with product tied up on the ocean waiting for decisions with the Hanjin bankruptcy without a backup struggled at best.

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Will Your Supply Chain Risk Surprise You?

November 15th, 2016
supply chain risks

What happens when you have a break in your supply chain? Do you have contingency plans in place to mitigate business interruption?

Supply chain risks abound! Just look at the recent bankruptcy of Hanjin. It created havoc in the global supply chain. Ships were virtually stranded on the water. No one knew how they’d get paid. Yet, customers still needed the product. And so the results were scary. Have you thought about these types of risks within your supply chain?


At our APICS Inland Empire executive panel and networking symposium, we had a panel of experts on navigating the global supply chain. A renowned international business attorney brought up a significant topic — what if a conflict brews in the South China sea? Your supply chain could stop in its tracks. What backup plans do you have?


How about natural disasters? We cannot control these but they have a BIG impact on our supply chain. Think about hurricanes, earthquakes, fires, volcanoes and many others. Unfortunately, they seem to occur at an increasing rate — or at least they quickly go viral. Recently, there was a fire along the 15 freeway in Southern CA on the road towards Las Vegas and the north. It created havoc beyond trucks stranded on the freeway. Manufacturers ran short on materials. Railroads and trucks were re-routed. Customers had to air freight if speed was essential. It even impacted the ports.


And there are many other risks. Security is a big topic alone. The bottom line is you must prepare for these risks. What will you do to ensure business continues?

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Mother Nature Adds to Supply Chain Risk

September 2nd, 2016
quoted in Wall Street Journal

California wildfires have the potential to disrupt the flow of US commerce. A report from the Wall Street Journal quoting Lisa Anderson.

Supply chain risk has increased exponentially over the last several years. Mother nature is unpredictable which is the antithesis of what the supply chain needs to perform predictably and profitably. For example, the California wildfires created a logistical nightmare – trucks were parked along the 15 freeway, rail cars were stacked up and being re-routed as best as possible, trucks in and out of Southern California were affected and even the ports were impacted. I was asked to comment about the fire in a Wall Street Journal article. This occurrence was not an isolated incident. There are almost too many examples to choose from; however, one that pops to mind is the Japan earthquake. It sent ripples throughout the world in supply chain disruption. In the U.S., hurricanes, tornadoes and floods can have a dramatic impact. Certainly everyone remembers the impact of Hurricane Katrina. And this doesn’t even begin to address other supply chain risks such as the port strikes and political unrest.

Successful executives will not hide their heads under a rock! Instead, executives will incorporate these risks into their strategic plans and risk analyses. Some of this is uncommon common sense. If you have a key supplier located in a hurricane zone, you should develop a backup. If you want to make sure supply will remain largely uninterrupted, it will require ongoing relationships with multiple suppliers. You can also work with your suppliers to strategically position inventory. There are a host of options. The bottom line is that pre-planning will work. Panic after an event will just create unhappy customers and give your competition a definite advantage.

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