Risk in supply chain situations is one of the major elements which leaders must plan around. Though companies always hope each new year won't bring too much in the way of disruption, the evolving factors around the logistics world don't let them take any time off. From changing climate conditions to unstable political situations, the threats to today's globe-spanning supply chains take many forms, each of which must take its place in an appropriate risk mitigation strategy.
While no two years ever have exactly the same set of supply chain risks and challenges, the threat landscape of 2017 is still largely relevant in the context of preparing for the rest of 2018. Last year's trends will cast a shadow over this year's strategies and point to the future direction of global logistics.
Nature, the internet and international incidents
The vast variety of events that can cause a supply chain disruption was on display in 2017, and issues in 2018 may cover the same spectrum. Supply & Demand Chain Executive reported that after compiling the EventWatch 2017 Annual Report on disruptive incidents, industry organization Resilinc pulled out a few categories of risk that deserve to receive some focus from planners this year.
For example, global organizations should make sure they're aware of any developments in the tense political situation on the Korean Peninsula. North Korea's ongoing contentious relations with countries near and far may lead to transport disruptions. The company also highlighted efforts by the Chinese government to get pollution under control. Some manufacturing methods that have thrived in the past may lose prominence. Shortages of high-tech components such as NAND flash chips is another potential disruptor. The global supply of those components received a temporary disruption in 2018.
To become effective international traders, companies must possess a great deal of digital infrastructure. That, too, presents its own kind of threat. A cyberattack on one company in the supply chain could slow that company down, or even put its partner organizations' data at risk.
Finally, there's Mother Nature. Resilinc explained that storms created a path of destruction in 2017, with U.S. businesses suffering major disruptions. Organizations should expect another unpredictable year of weather and be ready for anything.
Organizations can deal with today's evolving risk landscape by using more advanced technologies and methods. Supply chain executives Christopher Caine and George Bailey, contributing to Supply Chain Management Review, suggested that artificial intelligence and machine learning are among this next generation of solutions. Armed with the right algorithms, companies will be better able to predict both market opportunities and potential escalating risk factors.
Bailey and Caine pointed out that organizations need better ways to predict changing factors in their markets, and AI may be the key. Today's organizations have access to more data than ever before, and if they can sense trends before they reach critical mass, they may become better at avoiding danger and disruption, as well as at pursuing better outcomes. The value of AI comes from the fact that its insights may be faster and more esoteric than human statisticians can deliver.