Risk management is an essential part of successful supply chain management. As Eva Lever knows, the risks surrounding supply chain elements continue to evolve, rendering the risk management strategies of the past ineffective. The risks aren’t bound to transport options, time of day or predictable elements. They are constantly changing and unavoidable. Understanding the industry’s serious risks can help you reduce the impact these situations could have and the disruptions threatening local, national and global businesses.
Eva Lever’s List of Supply Chain Threats
Although there could be dozens of specific risks affecting your operations, there are several general risks that are known to impact businesses of any size. These are some of the top concerns to include in your risk management strategy.
1. Economic Instability
A real threat to global trade is the economic instability of a major player. For example, the bankruptcy of a major shipping company in one country can have a domino effect on the global supply chain. If countries where you operate have falling employment rates, consider options for attracting and retaining dedicated workers.
2. Government or Political Changes
On a global scale, political instability is a crucial concern. Consider the impact of Brexit or the war between Russia and Ukraine. There are many pieces to the supply chain puzzle and one country’s political troubles could have a massive impact on distribution.
3. Environmental Risks
There is a huge push for sustainable practices among industries, as there are serious concerns about dwindling supplies of raw materials. More laws are being passed to help protect the environment, which could also impact shipping opportunities. Eva Lever recommends working with reclamation centers for raw materials and recycling as much waste as possible.
4. Weather Events
For any part of the supply chain relying on ocean freight, tropical storms and extreme weather present a cause for concern. In addition to the known impact of hurricanes and other storms on the transport of cargo, global climate change brings unknown risks and dangers. Anticipating tropical storms and evaluating ocean routes can help shippers scale their operations to avoid serious risks.
5. Catastrophes
Weather events aren’t the only concerns that impact transport opportunities. Famine and earthquakes are two catastrophes that are on the horizon with a global impact. Backup plans are essential for remaining operational during natural disasters, equipment failure or other major catastrophes.
6. Cyber Attacks
The supply chain is at extreme risk of cyber attacks, as someone with malicious intent could easily cripple a number of supply chain networks and create mass chaos. Acts of terrorism or malicious individuals can cause rate hikes and jeopardize supply chain transactions around the globe.
When preparing for supply chain risks, Eva Lever recommends fully understanding the direct risks you face and the impacts they have on your operations. From there, you can build a management strategy to minimize the impact of adverse events.