World events contain supply chain risk

     

A flood in China can affect textile shipments to the United States. A shipping strike in France can slow sales in South America. The world of global commerce and supply chain management presents constant risk to companies trying to make use of corporate partners around the world. The answer, however, does not have to involve retracting and making companies more local. It is possible to thrive in a deeply connected supply chain world, as long as executives think of risk management strategies.

Worldwide dangers in check

A recent InsuranceNewsNet report highlighted the many things that can go wrong in international production and shipping. Limiting its examples to Apple, the source highlighted a toxic chemical exposure and two explosions. The company's factories in China, far from its U.S. base, have been the source of several dangerous accidents. How companies get their production moving again when problems take hold is one of the true tests of effective supply chain strategy.

The source stated that while many companies have shipped overseas for years and are well aware of the risks presented by events at foreign suppliers, the connected nature of the global supply chain has complicated matters in recent years. The source stated that the World Economic Forum now believes businesses should develop brand new strategies to counter disruptions. The U.S. government has also launched its own risk management programs.

The key to adopting new strategies, according to the source, is to take a deep view. While companies may only consider their internal data when deciding risk management action, such policies are now likely to miss several critical factors affecting the supply chain. The source urged close inspections of foreign suppliers to gain an accurate portrait of risk, with employees making the visit in person where possible.

Novel disruptions

Disasters are an unpredictable scourge to the supply chain, but they are not the only type of event that can have a negative impact. According to the Retail Gazette, companies that ship goods through London may soon have to develop backup plans. The Summer Olympics, a deeply complex event, is expected to impede the way shipments move through the British capital. In the case of the Olympics, companies have advance warning, meaning disruptions will be easier to cope with than a natural disaster. Supply chain software executive Karsten Horn told companies they should do just that, adopting a specialized plan for when the athletes arrive.