The breadth of the scope of supply chain risks associated with the expansion of globalized operating models has widened significantly in recent years. Many of these risks can be traced back to increasing interconnectivity and complexity within global supply chain and transportation networks. The need for better awareness and management techniques that can effectively deal with these risks is driving a now familiar discussion within the manufacturing industry. Many analysts now believe that managers facing increasing complexity and interdependencies within their supply chains need to make risk preparedness and mitigation a meaningful priority.
Modern organizations need tools for managing all of the raw materials and resources that go into making their products and satisfying customer demand. For this, they have traditionally relied upon a proprietary supply chain management solution provided by an outside software-as-a-service vendor. Optimized supply chains generate measurable operating improvements in a world that demands quality at a competitive price.
The prototypal supply chain management solution works by enhancing communications within organizations so that different departments in it can better share critical information. In this way, islands of technology can be linked together making individual and enterprise-wide operating activities easier to monitor and measure. Supply chain management orthodoxy and convention also encourages the sharing of data with supply chain partners. The rational for using a supply chain management solution in the first place is based on the philosophy that it is advantageous for an organization to create transparency between the layers of responsibility for all of the diverse parts and components that go into an organization's finished product.
Organizations that benefit the most from the use of a supply chain management solution are those that encourage their up-stream suppliers to use the same or similar solutions. The greater the number of observational windows created within a supply chain, the more effective it will be at squeezing out waste and inefficiency.
Risks of Global Supply Chains
Most organizations have risk management methodologies in place to enable them to address and respond to localized supply chain disruptions. Certain high-profile events that could be fairly characterized as force majeure events have brought to light the need for organizations to deal with risks outside of their control. Tapping into a long and complex supply chain can subject an organization to profound unintended consequences and potential cascading failure. Some of these consequences may be difficult to mitigate. They include serious public relations problems, brand erosion, legal exposure and regulatory sanction. Major disruptions to global supply chain networks occurring just in the last few years include a global financial crisis, flooding, a tsunami, terrorist threats, piracy on the high seas, labor strikes, and instances of massive currency fluctuation.
The reality of critical threats to an organization's supply chain networks triggers a new imperative for managers of global manufacturing firms. This mandate calls for the development of new rapid response measures that can mitigate supply shocks and related problems brought about by compliance and quality control issues stemming from the corruption or failure of the global supply chain. To be effective, these measures need to be part of the organization's overall risk management protocols. Extenuation across the full spectrum of global supply chain risks requires that the new measures be integrated into some form of supply chain management solution sufficiently sound and designed to aid in the mitigation of risks associated with working these vast intercontinental supply chain networks.
Posted by LeanCor Supply Chain Group
LeanCor Supply Chain Group is a trusted supply chain partner that specializes in lean principles to deliver operational improvement. LeanCor’s three integrated divisions – LeanCor Training and Education, LeanCor Consulting, and LeanCor Logistics – help organizations eliminate waste, drive down costs, and build a culture of continuous improvement.Facebook LinkedIn Twitter Google+