Daily Archives: May 23, 2013

What Risks Lurk in Your Supply Chain?

Do you know what risks are hiding in the dark and dreary basements of your supply chain? Are your suppliers using sweatshops that will ruin your image if they are discovered? Did your primary supplier build the only factory that can provide you that custom make chip on the ring of fire? Do floods threaten to wipe out supply routes over low-land sub-sea level plains? Does civil unrest threaten to close off borders? Is your primary carrier on the verge of financial bankruptcy? Are you sure? Really?

Risks in your supply chain are not like the Ravenous Bugblatter Beast of Traal — they’re worse. They don’t assume that just because you don’t see them coming that they can’t suddenly appear and swallow your organization whole. They are there, and for four out of every five companies, they are going to materialize over the next year and send shockwaves that reverberate and echo through the entire supply chain, causing millions of dollars of loss and damage along the way.

And, even worse, it seems that the risks are multiplying. A quick review of the eighth annual risk report from the World Economic Forum (Global Risks 2013) gives one the impression that, like memes, risks have learned to mate and multiply at a pace more rapid than ever thought possible. (Even LOLCats will soon be left in their wake if risk management continues to be ignored in 2/3rds of organizations.)

You need to be aware of sub-tier risks in your supply chain and, more importantly, you need to know how to assess them. If your supplier of corrugated cardboard goes out of business, that’s no big deal as there are dozens of corrugated cardboard suppliers. But if your custom control chip manufacturer can’t produce your chips because of a rare earth shortage, you need to know well before the shipment doesn’t arrive and you have to shut down an entire automotive production line.

For every relevant risk, you need to be able to get a grip on both the consequence of the materialization of the risk and the potential cost of the disruption it will create. There are likely more risks than you can enumerate, but there are only so many likely to happen, and only so many of those with dire consequence. As long as you can properly identify, assess, and develop mitigation plans for those with dire consequence, you can rest assured that, whatever happens, you will survive the storm. But if you can’t …

So how do you identify and assess sub-tier risks? We’ll get to that in a series of posts on visibility that will begin this summer, but if you want a leg up on your competition, I would suggest that you strongly consider the forthcoming webinar on Assessing Sub-tier Risks by Resilinc, who will be doing a deep dive into a proper process, the benefits it will produce for your organization, and the high cost of doing nothing in today’s global economy.

You can Register for the webinar, which will take place on June 19, 2013 @ 11am PDT / @ 3 pm EDT, at your earliest opportunity.

The webinar will be hosted by Reslinc’s founder, Bindiya Vakil, who has a Master’s of Engineering in Logistics from MIT with a thesis that addressed Design for Logistics, Planned Obsolescence, and Recycling long before Supply Management realized the importance thereof and the need for visibility in order to achieve these goals. (the doctor knows this first-hand as he has been preaching this, mainly on deaf ears, since the beginning of SI — see this early post on Design for Recycle from back in 2007) As a result of this work, and work since, Bindiya has found that visibility is not only key to long term supply chain viability, but also to resiliency in an age of rapid supply chain globalization and the risks that come with it. In this webinar, Bindiya will share what she, and Resilinc, have learned over the last decade about assessing, and managing, risks in your supply chain.