Unpredictable things happen in modern supply chain management, and the key is to have a proper risk management strategy for your business. It is because modern businesses and companies have a global supply chain; goods are manufactured here and sold on the other side of the globe. Today, we’ll discuss the top 10 global supply chain risks.
Top 10 Global Supply Chain Risks
Let’s discuss the top 10 global supply chain risks and they’re as follows;
Information Risk
The business data and information that you need for your production and manufacturing processes come from various sources like the following;
- Sales and HR
- Logistics partners
- Customers
- Product developers
- IoT Network
It is significant that the information should be reliable and consistent in order to make the right conclusion. AI and cloud-based software would help you to standardize and integrate valuable data in real-time. The right information at the right time helps you to decrease the risk factor.
Limited Visibility & Transparency
Many people use supply chain visibility and transparency synonymously, but they are completely different terms. Visibility offers an internal view of the end-to-end operations of the company in real time; transparency offers an external view of your company and the capability of your business to expose various practices. However, ethical sourcing of raw materials and labor practices are some of the areas where you need SC visibility and transparency. Without SC visibility, you can’t have SC transparency; it would pose a great threat to your business. It is because you are blind to your business operations.
Some of the main technologies and tools that would help you achieve visibility and transparency are as follows;
- Blockchain technology
- RFID sensors
- Tracking tools and equipment
- AI (artificial intelligence)
- Big Data
Volatile Demand
The product lifecycle has become very short over time, and it is difficult to correctly predict the upcoming marketing trends for production. The launch of a new product design, style, or trend on Instagram; customers would start following it and placing orders right away. Companies should combine their operations responsively in order to satisfy the short and complicated product lifecycles.
However, the designing team and R&D should be aware of the demand for the new product and service, the quick product and service development would help the company to satisfy the demand by implementing a sustainable and efficient strategy. Sales, marketing, and various areas of your company should be on board to spread awareness about the latest product. It makes sure that you have efficiently dealt with retail and sales elements.
Logistical Issues
Many shipment issues have come to the surface in recent years like port closures, strikes, and ocean freight issues. The key incident in recent years is the blocking of the largest container ship at the Suez Canal for a week and it had a catastrophic impact on the global SC processes and network.
In order to decrease the SC disruptions and issues, you should employ real-time information and dynamic modes of transportation. Companies could decrease the risk factor by taking the following steps;
- Standardized freight documentation
- Cloud collaboration
- Shipping processes technology
- Automated freight management
Shortages of Supplies
In order to deal with a sudden increase in demand issue; 64% of the businesses and companies have been storing inventory to manage the “just in case” scenario. Companies ZF AG are implementing the radical demand planning strategic approach. It helps them to decrease inventory and amplify the availability of products within a multichannel SC network.
Cyber Threat
Cyber attacks pose a significant threat to the modern SC network and processes. Malicious hackers could attack and jeopardize the SC network of the company and compel the freight prices to increase. Many radically extremist groups launch cyber attacks on the government, company, or individual systems. In order to deal with the cyber threat, companies should offer limited access to the shipping processes and maintain strong digital and physical security of their system.
Consistency of Suppliers
Approximately 45% of the suppliers have the capability to continue their operations after the disruption. The disruption to supplier consistency comes from various types of risks and the consistency of suppliers is also applicable to production and manufacturing. In order to deal with the disruption and consistency issues, companies should deal with a diverse network of suppliers.
Climate Change
Extreme weather conditions and climate change pose a significant threat to the global supply chain like ocean freight. Tropical storms could destroy the ocean carriers into wreckage. The right mapping of the sea routes has allowed the carriers to avoid the route of the tropical storm. However, some of the natural disasters like flooding, earthquakes, and lightning; companies can’t avoid them.
Economic Recession
Global economic recession and instability greatly impact the SC network and processes. For instance, the bankruptcy of the South Korean largest shipping company has greatly decreased the global SC operations. In order to deal with economic issues, large companies should create employment opportunities, and apprenticeship programs and facilitate SC careers in the developing countries where they’re running business.
Political Instability
An unstable political environment has a negative impact on global SC operations. The Brexit deal has jeopardized western and European trade and SC operations to a great extent and weakened the position of the British pound. Brexit is just one example; political affiliation could increase or decrease the trade and supply chain operations of businesses and companies.
Conclusion: Global Supply Chain Risks
After an in-depth study of the global supply chain risks; we have realized that global SC operations and processes deal with various types of risks and processes. If you are learning about the global SC risks, then you should keep in mind the abovementioned top risks.
References
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