“Is Your Luck Running Out? Managing Supply Chain Risk in Uncertain Times”, a report from global management consulting firm A.T. Kearney, offers some valuable advice on risk mitigation to supply-chain managers.
Supply-chain management leaders stand out from the crowd through the delivery of high-impact, highly recognisable strategic business functions. However, their most important function, namely risk management, has dropped down the list of things to do.
The Future Belongs to Those Who Can See It Coming
The A.T Kearney study argues that a huge number of supply chains are one bad-luck situation away from a serious disruption – the kind that could practically end their business. This is often the case because supply chains are built up over time by managers’ reactions to demand and supply as they come. This in itself means the business has taken advantage of luck, but to continue to use this method to ensure a company’s on-going success is foolhardy and inadvisable.
Hoping the Luck Holds Out
In today’s shaky economic and geopolitical environment, every business is looking to capitalise on their luck. However, statistically, not every business can be lucky. The question remains: if the luck runs out, what plans are in place to ensure that the success doesn’t?
Advice from Rapid Ratings
The study, co-written by the research and analytics firm Rapid Ratings, also focuses on what supply firms can do to bad-luck-proof their business. Whether the business supplies Lin Bins to warehouses like https://www.duffydiscount.com/Bin-Rack or ships JCBs to China, identifying, diagnosing and resolving issues in the supply chain is key. An analysis of social media posts from users and customers within global supply chains in 2015 showed where the concerns lie.
IT concerns and changes, sustainability issues, commodities fluctuations and the changes and destabilisation in regulatory environments are all big concerns. And on top of this, climate-change concerns accounted for more than half of all posts.
Managing Latent Risks
A.T Kearney also noted that latent risks – those pesky little issues which aren’t even recognised as issues – pose the greatest threats of all. How do companies mitigate risk when they don’t yet see it as a risk?
Herein lies the problem for many supply-chain leaders and managers. Limited bandwidth and budget mean that growing the business always comes before defending the supply chain.