Top 10 global supply chain risks
There are any number of issues that could be working against your supply chain performing to the best of its ability. Ready to tackle trouble before it starts? Here are 10 of the biggest challenges facing your company's supply chain, according to the World Economic Forum’s Global Risks Perception Survey 2014
10 | Interstate Conflict
When two states, countries or even regions are at odds, it spells big trouble for a supply chain that passes through them, or even one that runs adjacent to either. These conflicts can affect everything, from the free flow of raw materials and supplies, to readily-available local labour, to 3PL companies within the country. Deutsche Post, for example, ceased all deliveries within the Ukraine in 2016, due to instability in the region. It was a move that, while arguably smart for the German delivery company, left some 620 German companies in the Ukraine without access to their services.
9 | Extreme Weather Events
When nature decides to upset industry's best-laid plans, it isn't always easy to reroute or rebuild. From tsunami waves that could ground a cargo ship for good to earthquakes that cut off well-travelled routes, the transport component of the supply chain is particularly vulnerable to these sudden disruptions. While chains in disaster-prone areas can (and do) tread lightly, some natural events are completely unanticipated. Consider the aggressive Southeast US blizzard of January 2016. While veteran truck drivers might have been able to guide their rigs through typically snow-light North Carolina, the lack of local infrastructure for preparations like brining and plowing might have still barred the way.
8 | Water Crises
Water plays a much larger role in the supply chain than many professionals realise. Not only is it crucial to the manufacturing process itself, it also serves as a conveyance factor when boats factor into your transportation network. If the channels and eddies that give semi-inland boats freedom to move towards a shore dry up or become inaccessible, expect your product's journey to dry up as well. If your manufacturing or shipping area is experiencing a severe drought, a shortage of labour may also hold up your delivery schedule.
7 | Catastrophes
From terrorism to manmade disasters, catastrophes have a disruptive influence that ripples outward, closing roads and heightening security out of necessity. If your cargo is slated to travel through a region that's recently been affected by a catastrophe, you can bet it will slow down your shipping speed considerably. Often, these occurrences aren't ones that give a heads up - they happen suddenly and force companies to reroute and re-plan supply chain routes on the dot.
6 | Governmental Collapse
It's no surprise that the fall of a state has far-reaching and catastrophic effects on a supply chain. As parties or individuals vie for the vacated seat of power, shipments of goods or components are vulnerable to damage, theft, or becoming a political point of contention in the ensuing chaos. While some countries have simmering unrest that can be sidestepped with enough advanced notice, other conflicts, such as the attempted coup in Turkey in 2016, could occur virtually overnight. This can significantly slow or even stop goods that are scheduled to move through the country in question. Without cohesive and consistent governance, an international supply chain can run into problems at checkpoints and borders.
5 | Failure of National Governance
Even when a country is ostensibly under control and being operated by a ruling individual or party, that doesn't necessarily mean said party is ruling well. If a country's leaders aren't following through on the laws and regulations that keep your supply chain shipments safe, you could end up with adulterated raw materials, fraudulent components or an infestation of counterfeited goods within the country and beyond its borders.
4 | Underemployed or Unemployed Individuals
The current truck driver shortage is a prime example of how too few workers, faced with too many positions, can devastate the continuity of supply chain growth. Faced with mounting expectations - most notably the recent eLog mandates - and stagnant wage growth, the over-road transportation industry is having a crisis that directly extends to their clients. With less availability of drivers, shrinking availability in LTL providers follows suit as 3PLs do all they can to maximise loads and efficiency in every mile. Less options for the manufacturers means less options for distributors, sellers, and eventually, the end customer as well.
3 | Failure to Adapt to Climate Change
While not all supply chains are heavily linked to environmental change, others are entirely dependent on it. Consider the case of coffee giant Starbucks, which expressed deep concern in 2016 for coffee crop yields that continue to lag in the face of climate change. All perishable products are vulnerable, even tangentially, to shifts in climate change - unseasonable weather can render an entire season's harvest unviable, and droughts, wildfires and floods can render arable farmland or grazing plains unusable.
2 | Data Fraud and Digital Theft
From supply chain partners to 3PLs, the number of individuals required to operate a supply chain grows exponentially larger as a company does. Each of those individuals represents a potential security risk - the wider the network, the larger the gaps. From proprietary designs and research to billing information, the data carried through your supply chain is just as important as any physical components your company may be moving. As new warehousing innovations like the IoT and RFID-based shelving practices become more commonplace, hacking, spoofing and digital theft will inevitably follow suit.
1 | Cyber Attacks
While there is no shortage of digital thieves waiting to access and steal your data for profit, there's another dangerous group eyeing your supply chain at the same time - one that has nothing to gain but your misfortune. Cyber-attacks can occur for numerous non-financial reasons, from gripes against a company's political or cultural leanings to criminals simply looking to cause mayhem by introducing instability. If your supply chain doesn't have a continuous assessment policy when it comes to your digital security, you may be making yourself vulnerable to these types of attacks.
Even the most foolproof supply chain plan can't hope to completely avoid every one of these problems, but knowing where your potential weak points are is an excellent start. These are particularly important for international chains, but each of these tips applies to domestic-only companies as well. Forewarned is forearmed, so don't let your company or your supply chain suffer in the face of the unexpected: use these tips to make an actionable plan and you'll be able to keep your business running smoothly through any scenario.