Businesses around the world rely on supply chains to create, manage and distribute goods and services. Most of these supply chains reach beyond local borders and operate in a globalized environment which prioritizes cost-competitive production. To achieve these cost targets, companies have taken out all unnecessary capacity and inventory within the whole supply chain to maximum revenue. As a result, if anything goes wrong in just one link of these chains, entire businesses can stall. For most companies, these supply chains are at considerable risk of getting bogged down due to threats such as natural disasters, criminal activities, and cyber-attacks.
Joseph Yacura, a supply chain expert and consultant at ISG-ONE recently discussed how to manage potential risks facing supply chain operations in a video report released last month (see video below). According to Yacura, supply chains and supply chain risk management are becoming “a critical function of almost every company in the world.”
Yacura explained that in certain regulated industries such as financial services, insurance, healthcare and others, new regulatory requirements have been implemented. These regulations require that suppliers be monitored and managed. Failure to do some place the regulated business in serious exposure to significant financail penalties. This is an added risk for affected companies to manage.
According to the video, supply chain disruptions have become much more frequent, and their severity has increased “dramatically”.
To keep these increasingly complex and sophisticated supply chains secure moving forward, Yacura stated that companies must prioritize supply chain risk management, and recommended companies have a supply chain risk officer in place to deal with these issues.
Currently the best most companies can do is to monitor and react to supply chain disruptions that have already occurred. In the future, leading companies will use predictive modeling to anticipate risk and disruptions within their supply chain. Risk associations, that are shared between suppliers, will also be identified to mitigate future supply chain disruptions.
See also: Supply Chain Security and Risk Management in SupplyChainBrain magazine