While some companies have strong plans in place for natural disasters, terrorist attacks, disease outbreaks and wars that may have an impact on their supply chains, others fail to implement policies that address these issues sufficiently. However, it's essential for firms to have the organizational adaptability that allows them to make quick changes in procurement, logistics or even manufacturing procedures, especially if their operations are spread across the globe.
Many companies face challenges
According to a recent survey from Deloitte, executives of firms worldwide are becoming more concerned with the possibility of supply chain disruptions and the risks they face as they try to meet consumer demand. The data indicated 45 percent of executives claim their risk management strategies are somewhat or not at all effective. Fifty-three percent claimed their disruptions had become more expensive in the past three years, while 48 percent thought the frequency with which such risks occurred had become more frequent in the same timeframe.
"Many companies do have some form of a supply chain risk management program, but unfortunately they do not always get the results they need from these programs," said Kelly Marchese, principal at Deloitte Consulting. "To be effective, companies should take a holistic and integrated approach to managing supply chain risk and go beyond traditional approaches. Because of the complex nature of today's supply chains, disruptions will inevitable occur. True resilience means building the ability to recover efficiently and decrease the impact of these events."
Reducing risk within a system
While firms can't eliminate all risk completely, there are strategies they can employ to help reduce the impact costly disruptions have on their supply chains. Having a firm grasp on events taking place in areas which a firm does business can be one important way to reduce risks; if a company has knowledge of political unrest in an area from which they source materials, they may be able to alter their procurement strategies for emergency preparedness by purchasing materials from elsewhere.
It's also critical for firms to routinely examine their emergency strategies to ensure they'll continue to be effective, if needed. While a company may have plans for its logistics and natural disasters, alternate strategies can quickly become outdated or irrelevant, making it essential for businesses to update their risk mitigation techniques to ensure they'll continue to source, produce and ship goods across the world.