A desire for low cost networks has led some businesses to turn a blind eye to trends that may expose their global supply chains to increasing risk, according to a new report.
The combination of geopolitical tensions, climate volatility and technological dependencies is putting global supply chains under more strain than ever before, according to recent report published by UK risk management association Airmic, in collaboration with AIR Worldwide, Gallagher, HDI, Lloyd’s and Sedgwick. The report warned that ignoring these risks could result in a catastrophic event and has the potential to grind supply chain operations to a halt and inflict significant reputational damage to businesses.
The report outlined recent trends that are placing increased pressure on supply chains, including increasingly protectionist policies and Britain’s departure from the European Union; a volatile and more extreme climate, which is exposing the high volume of stock and supply routes that reside in areas exposed to natural disasters; and an increasing reliance on technology, connected devices and automated production lines that leave businesses vulnerable to an IT outage, cloud disruption or cyberattacks.
“Most businesses have a good understanding of their suppliers, but how many track their suppliers’ suppliers? The web of relationships in a typical modern supply chain is incredibly complex to unpick,” said Richard Cutcher, research and development manager at Airmic. “This report is designed to support businesses to inject resilience into their entire supply chain.”
Kamban Parasuraman, principal engineer at AIR Worldwide, said that companies need to be more proactive in mapping and digitising their networks to address potential risks.
“Supply chain is a big-data problem,” said Parasuraman. “Mapping and digitising supply chain networks is the first step in understanding an organisation’s supply chain risk.”