Supply Chain risk management should address common disruptions


As environmental, geopolitical, economic and technological trends shift the way global businesses operate, organizations are urged to reevaluate their risk management policies.

This encouragement comes from a new report by the World Economic Forum that discusses global supply chain disruptions for which companies must prepare.

1. Environmental shifts

This is the topic that spread the most concern through global organizations in the coming year, as natural disasters were ranked as the most-disruptive trigger to influence the supply chain, the report noted. Unfortunately, these occurrences cannot be controlled.

supply chain disruption 

Still, companies can prepare by having multiple suppliers and transportation means in place. That way, if one section of the business is shut down, supply chain managers can still operate, even if it is not at full capacity.

2. Geopolitical trends

Political unrest was ranked as the second-highest trigger for global supply chain disruptions in 2012, according to the report. While these incidents are not uncontrollable, they cannot be completely tamed. Instead, WEF classified them as "influenceable," or situations that can be swayed one way or another through time.

As a result of these situations becoming more hostile and troublesome for businesses, the Department of Homeland Security recently released a report aimed at helping companies remain secure in environments outside their governments' control. The agency is also working on standardizing policies across the world to ensure supply chain resilience.

3. Economic concerns

The economy, of course, plays a role in how organizations operate. The World Economic Forum ranked sudden demand shocks as the third-highest issue for global supply chains. This basically boils down to consumer frugality and their lacking desire to spend money.

Again, this type of occurrence is not completely controllable, but can be influenced by companies. One thing that businesses can do is to forget about trying to predict how consumers will spend and instead become a reactive organization, according to an EBN Online report. This will allow them to save money by reducing the storage of unnecessary inventory, enabling them to invest in the final global supply chain disruptor.

4. Technology

Shifts in innovation are something that supply chain managers can control. Even as new solutions enter the market, it is ultimately up to decision-makers whether or not to utilize them.

Communication technologies are the most popular in supply chains. They allow all sections of the business to remain connected, helping companies prepare for each of the other aforementioned disruptions.