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mitigating-risk1000 Mitigating Risk in the Supply Chain

A Timely Topic: Mitigating Risk in the Supply Chain

During the month of April this year, our SCLA Executive Think Tank group discussions centered on geopolitical risks to global supply chain sourcing and strategically positioning our supply chains for success.

Unfortunately, geopolitical tensions in several areas of the world are running high, and these are causing more than just theoretical risks, but real-world threats and disruptions to the supply chain.

From the political strife in Myanmar to unprecedented port congestion around the globe (even before the 6-day Suez Canal blockage incident in late March), it is an understatement to say it’s a challenging time in the supply chain industry.

Two presentations to our group early in April, by Chris Jones of Descartes Systems Group and Steve Holic of Holic Supply Chain Solutions, respectively, provided some fantastic insights into risk mitigation and why supply chain agility and resilience are hot topics right now.

Minimizing Customer Impact by Diversifying and Relying on the Data

Mr. Holic hit on what may be the key reason we need to link agility and risk resiliency to procurement and category management, as well as our supplier management strategy: minimizing customer impact.

Shortages—such as the computer chip/circuit board shortage that has recently arisen (and that Mr. Jones focused on in his presentation)—hurt everyone in the marketplace.

But how do we minimize customer impact? It’s a multi-pronged effort, of course. However, one of the biggest mitigating factors is truly diversifying the supply base.

Mr. Jones shared that the classic sourcing strategy of having multiple manufacturers is not necessarily good enough in today’s world. These sources also have to be spread around the globe—not all located in China, as has been the case in the past.

Luckily, we can use new, stunningly powerful data solutions to determine just where we might be able to discover new global resources for almost any component or manufactured good. Mr. Jones gave us some examples using a powerful data modeling tool that his organization has developed.

Among other areas, he presented a deep dive on semiconductors, outlining a data-driven assessment of why these items present a high risk to supply. In short, so much manufacturing/assembly of circuit boards takes place in China today; if the US loses access to that resource, we are in trouble.

Stress Testing is Also Crucial

A little while ago, I published an article about stress testing the supply chain to find hidden vulnerabilities. This remains an avenue worth pursuing. However, data modeling resources, like those Mr. Jones presented to our group, may make finding vulnerabilities less labor-intensive.

One thing is certain. Emerging technologies are poised to help our hardworking supply chain teams solve the significant issues we’re currently facing. This is excellent news. And perhaps supply shortages will be a thing of the past in just a few years.

What Are Your Experiences With Supply Chain Risk Mitigation?

Has your organization been embracing data and technology to gain new insights and introduce more agility into your operations? We would love to hear more about your experiences.

Please feel free to connect with SCLA to share your perspectives and join the conversation—or reach out to me directly!


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Tuesday, 21 September 2021

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