Do you have a strategy to deal with supply chain risk, and, if so, what risks are you currently planning for?
I ask because the balance of risk has been changing and if you are not keeping up, then you could be all geared up to deal with the wrong risk.
The Chartered Institute of Procurement and Supply has just published its quarterly Risk Index which highlights a shift in the global map of supply chain risk away from manufacturers in advanced economies, back towards the suppliers and producers at the foot of the global economy as a result of the commodity price crash and a slowdown in China.
The index, which is produced with Dun & Bradstreet, now stands at 78.7 for the first quarter of 2015 – down from 79.8 in the fourth quarter of 2014.
CIPS has warned that uncertainty about where the next crisis could hit has left supply chain managers struggling to mitigate risk or develop robust contingency plans for the year ahead.
John Glen, CIPS economist and senior economics lecturer at The Cranfield School of Management, says: “Businesses are faced with the prospect of political turmoil in Europe and economic slowdown in China but with no safe havens left for supply chains, businesses simply do not know where to turn.”
Threats that keep changing – and might never happen – are not the easiest things to plan for. The challenge for supply chain professionals is to be aware of these changing risks and to have appropriate plans in place.