Supply chain risk ranked as one of the biggest hazards facing businesses today

  • Written by Peter Needle
  • Published on 8 March 2016
  • Blogs

Why supply chain transparency is needed in today's rapidly evolving global economy.

For the past three years business interruption and supply chain risk have ranked as the top peril facing businesses. Almost half (46%) of the responses to A​llianz’s 2015 Risk Barometer survey rated it as one of the top three most important risks for companies. Supply chain risk was seen as a challenge by 77% of businesses according to X​changing Procurement.​

The challenges of a global supply chain

With a rapidly evolving global economy that is becoming more interconnected and diverse, production processes are growing ever more complex, resulting in more severe business interruption implications when things do go wrong. There is a growing interdependency across many industries and disruption as one supplier or business can in turn affect many others. Huge economic fluctuations combined with the prevalence of natural disasters and social upheaval in recent years have caused extreme challenges across supply chains, stretching many companies capabilities to the breaking point.

Supply chain disruptions can have far reaching financial repercussions and knock-­on effects for a business, with some taking years to fully recover from. The B​usiness Continuity Institute ​found 46% of the manufacturing businesses they polled feared supply chain disruption the most and 47% of businesses across all sectors said increasing supply chain complexity was leaving their organisations vulnerable to disruption.

Businesses now need to take into account a whole host of factors when weighing up risk in their supply chains. They need to consider not only where they are doing business, but also where their suppliers are doing business too. The political stability, strength of currency and volatility of regions where suppliers are based must be taken into account, as well as whether the location is prone to natural disasters.

Around 47% of companies do not have alternate suppliers or a backup plan in place should a major disaster or equipment failure shut down a facility according to T​he Global Supply Chain Institute.​ Over half of the firms surveyed also admitted that their suppliers could not continue supplying within a reasonable time frame if they suffered a disaster in one location.

This shows the need for a wider and more sophisticated supplier base. No longer can businesses afford to rely on a sole or small group of suppliers. By dealing with multiple vendors and knowing who supplies them, companies can remove dependency, minimize risk and gain control over the whole buying process. 

Reducing supply chain risk through visibility

Additional suppliers and a wider supply base also brings with it additional complexity and risk, calling for a more advanced solution to effectively manage them. With S​egura’s Supply Chain Mapping capabilities,​businesses are able to see a detailed overview of exactly who their suppliers are, where they are based and what they supply them with. This knowledge allows businesses to quickly anticipate risks and develop contingency plans with backup suppliers ready in place should any issues threaten to impact production. Built in real­time news feeds mean retailers are alerted of risks such as natural disasters, political instability or financial liabilities surrounding that supply chain as they happen and can take effective action early. With Segura businesses are always one step ahead and can get on top of disruptions early, lessening their impact significantly. 

Some level of risk is a certainty for any supply chain, and although it can’t be eradicated completely, with the correct tools it can be identified, assessed and reduced. S​egura’s cloud based supply chain system ​allows for effortless collaboration between different areas of a company, which can help businesses to detect potential break points and come up with a solid risk management plan that covers all eventualities.

By crafting effective early warning systems, businesses are able to develop robust processes to combat these problems before they become an issue. Proactively putting these measures in place now enables businesses to quickly and effectively react to disruptions, protecting themselves for the future.  

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