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Taking a Broader View of Supply Chain Resilience

As supply chains become more global and complex, the impact of any disruption intensifies. What’s needed today is an approach to resilient risk management that incorporates four key components: longer term partnerships; government policy that enables flexibility; an IT approach that fosters business continuity; and a strategy of “dynamic operations” that makes supply chains more resilient to potential disruptions.

By ·

As supply chains have become more global, more geographically concentrated, and more efficient, the potential impact of supply chain disruptions has increased dramatically.  Accenture’s own research has found, in fact, that significant supply chain disruptions reduce the share price of affected companies by 7 percent on average. 

The World Economic Forum first began exploring systemic risks and vulnerabilities to global supply chains and transport networks in 2011. As the WEF noted, the changing nature of these risks, along with their greater potential impact, highlights the need for companies to shift their focus from reactive to proactive risk management. While risks from natural disasters and demand shocks remain highly visible, other emerging risks such as cyber threats, rising insurance, and trade finance costs are leading supply chain managers to look at new mitigation options. Accenture’s research indicates that more than 80 percent of companies are now concerned about supply chain resilience.

The growing concern reflects the changing risk landscape and particularly the emergence of system-wide risks. Unlike localized or company-specific risks, system-wide risks are those which disrupt supply chains across multiple locations and a wide geographic area. They are created—or magnified—by the way supply chain systems are configured, so they are not easily resolved by individual actors. In a globalized, interconnected world, any major disruption—from an epidemic to a fire—has the potential to cascade through supply chains and permeate other systems.

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As supply chains have become more global, more geographically concentrated, and more efficient, the potential impact of supply chain disruptions has increased dramatically.  Accenture’s own research has found, in fact, that significant supply chain disruptions reduce the share price of affected companies by 7 percent on average. 

The World Economic Forum first began exploring systemic risks and vulnerabilities to global supply chains and transport networks in 2011. As the WEF noted, the changing nature of these risks, along with their greater potential impact, highlights the need for companies to shift their focus from reactive to proactive risk management. While risks from natural disasters and demand shocks remain highly visible, other emerging risks such as cyber threats, rising insurance, and trade finance costs are leading supply chain managers to look at new mitigation options. Accenture’s research indicates that more than 80 percent of companies are now concerned about supply chain resilience.

The growing concern reflects the changing risk landscape and particularly the emergence of system-wide risks. Unlike localized or company-specific risks, system-wide risks are those which disrupt supply chains across multiple locations and a wide geographic area. They are created—or magnified—by the way supply chain systems are configured, so they are not easily resolved by individual actors. In a globalized, interconnected world, any major disruption—from an epidemic to a fire—has the potential to cascade through supply chains and permeate other systems.

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From the September-October 2018
This month’s issue will help you in your job of staying ahead of the pack, following the leaders and, with luck, blazing the next trail.
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