Any single risk event can wreak havoc on a company’s operations, and a combination of multiple issues can totally collapse an organization. The number of potential hazards is growing every year. The first category includes taxes, tariffs, geopolitical issues, natural disasters and other events that fall beyond control of most companies. Tactical issues include problems with the supply base, a customer going out of business, and so forth. The final category includes day-to-day issues like a lack of labor, business process problems or failing internal systems. Following are the top five potential supply chain risks that should be on every company’s radar this year.
Fires or explosions
Plant or facility explosions and fires can significantly affect a company’s operational capabilities, as well as its employees and customers. Depending on the severity of the event, there may also be legal, media and/or brand issues to deal with. Possible mitigants are better fire alarm system, new sprinklers and/or a more comprehensive hazard insurance policy.
Hurricanes, tornadoes, wildfires, tsunamis and earthquakes can create major supply chain disruptions. Though complete avoidance may be impossible, having backup sources of supply, using good data backup strategies, obtaining the right insurance coverage and having a disaster recovery plan in place can all help companies stay in business during and after the event.
Since 80 percent of all cyber security breaches involve supply chain, companies need to conduct cyber risk assessments that include both supplier and customers, all in the name of mitigating the impact of a successful attack.
Port strikes, driver shortages and international regulations like IMO 2020 are going to happen—it’s simple a matter of when they happen and how much impact they have on individual shippers. By using cluster analysis and supply chain mapping in combination with real-time alerts, companies will be able to better prepare for potential transportation risk events.
Brexit, tariffs, currency fluctuations, trade wars and border controls are just a handful of the government-centric issues that are affecting the world’s supply chains right now. Currency fluctuations also fall into this bucket.
With the advent of technologies such as Internet of Things (IoT), Artificial Intelligence (AI), Blockchain and Big Data, companies can now use the past to predict the future. Global fuel shortages, labor shortages, tariffs and supplier compliance are making the situation difficult for supply chain organizations. In the past, organizations have been able to survive by keeping excess inventory and/or throwing additional resources at the problem. That’s just not sustainable in an environment where margins are shrinking, labor is scarce and competition for capital is increasing.
Combined, these challenges are prompting more companies to leverage technology that goes beyond the basics and that incorporates advanced capabilities. With these tools in hand, organizations can effectively analyze vast amounts of data, make better decisions, spot trends and even predict events before they actually happen. The company that uses software to incorporate social data and news events into its global supply chain planning is working with a more complete picture of both the opportunities and challenges that it faces. These technologies ultimately work together to help streamline supply chain operations, enable good decision-making and even reduce risk. It improves decision-making, reduces the time it takes to make those decisions and provides valuable data that companies are coming to trust and execute upon.