Disruptions in the Global Supply Chain

By failing to prepare for the unexpected, businesses risk everything from interruption to ruin


Rich continues: “When they export for the next six months to a year, will people be afraid of nuclear contamination of the containers and products? People may look to alternative sources because of their fear of radioactivity. People may not view Japan as a safe trading network. You can’t control fear. There could be major shifts in the supply chain.”

What to Do

“The government changed in Tunisia and Egypt,” Selle says. He points out that companies typically move into a market with the thought of setting up an infrastructure with good contacts within the government. Suddenly those contact may not be available anymore. Your support network can change.

“What we try to do,” Selle continues, “is work with our clients, get relevant information like port closures, protests, upheaval, airport closings. We analyze the situation for our clients and get them information so they can make well-informed risk decisions.”

Demand Foresight’s Tanski says companies must have a “what if” strategy. “Client supply chains are global,” he says. “If price increases, that’s a ‘what if.’ What if you don’t have enough product? Do you default to the highest-volume customers? What do we do?”

BravoSolution’s Martyn advises a strategic approach. “From a purchasing and procurement view, you want to investigate even your suppliers’ suppliers. You have to understand multiple levels of your supply chain.”

A final warning comes from Insight’s Karrenbauer, who cites a study from analyst firm Aberdeen Group that reported only 13 percent of the companies they surveyed had formally addressed supply chain vulnerabilities.

“This is simply irresponsible management, a failure of fiduciary responsibility to the shareholders, because it can place the enterprise itself at risk,” Karrenbauer warns.

Instead, he advises, companies must run scenarios and develop contingency plans for each one, creating a strategic supply chain that serves as a cornerstone for a comprehensive business continuity plan.

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