5 ways to address supply chain risk

This is an excerpt of the original article. It was written for the July-August 2016 edition of Supply Chain Management Review. The full article is available to current subscribers.

July-August 2016

What’s the difference between us and our competitors? Our people!” I can’t think of an organization that doesn’t publicly state that its people are its most important asset. Yet, anyone who has been in the workforce for any length of time knows that when the rubber hits the road—or something else hits the fan—people are usually the first casualty of cost cutting. It’s far easier to free up your talent for “other opportunities” than it is to close a plant or sell a fleet of trucks.

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There are many faces of supply chain risk in today’s global business environment, where anything from a natural disaster to supplier insolvency to geopolitical turmoil can temporarily or permanently disrupt the manufacturing and/or transport of goods. Add quality and safety challenges, regulatory and environmental compliance, and even economic changes like fluctuating exchange rates to the list, and it’s easy to see why risk should be a top-of-mind issue for supply chain managers.

While some supply chain disruptions are identified and addressed quickly and without much fanfare, others receive national attention. In April, for example, Toyota, Honda, Sony and other major firms encountered supply disruptions in the aftermath of multiple earthquakes in Japan.

“The earthquakes on Thursday and Saturday, which killed at least 41 people, reflected the vulnerability of Japanese companies to supply chain disruptions caused by natural disasters,” Reuters reported following the event, “and also highlighted the ‘just in time’ philosophy pioneered by Toyota and followed by many others.”

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