Global Senior Executives are evaluating the resilience of their
organizations international supply chains and realize the growing
Operational Risks.
Why have proactive Enterprise Risk Management teams been on high alert and how are they working the issues for over the past nine months?
These are evident clues in just one one 10-Q example:
“We
rely on sole direct and indirect suppliers or a limited number of
direct and indirect suppliers for some or all of these components that
we do not manufacture... Many of such direct and indirect component
suppliers are geographically concentrated, making our supply chain more
vulnerable to regional disruptions...we have experienced and continue to
experience disruptions in our supply chain due to the impact of the
COVID-19 pandemic.
If our direct and indirect vendors for these
components are unable to meet our cost, quality, supply and
transportation requirements, continue to remain financially viable or
fulfill their contractual commitments and obligations, we could
experience disruption in our supply chain, including shortages in supply
or increases in production costs, which would materially adversely
affect our results of operations.”
Inventory Management, Supply
Chain Transparency and Single Source Suppliers are just a piece of a
complex mosaic for many multi-million dollar U.S. businesses.
Covid-19 catalyst “Operational Risk Management” (ORM) has been a mainstream focus for months, just as it does after every major catastrophic event.
Yet,
when the implications of downstream impacts to our critical
infrastructure sectors such as transportation, healthcare and the
continuous ICT challenges become even more apparent, the Global
Executive suites must go into action.
The concepts of “Supply
Chain Resiliency” are well known, yet it is continuously surprising how
many organizations in 2020 have been caught off guard or are finding
themselves without substantial alternative strategies to remain
operational.
This is a result of diminished due diligence and a
continuous analysis with your Tier 2 and Tier 3 suppliers. Mapping each
of your key lines of business with a detailed understanding of Where,
How and Who your suppliers do business with, is just the beginning.
What about your own actions on:
- Increasing Inventory Levels
- Pursuit of Diversified Suppliers
- Finding New Suppliers with “Robust Supply Chain Resiliency”
- Increasing Your Geographic Diversity of Suppliers
In
a recent Interos Inc. report (https://www.interos.ai/resource-library/ )
of 450 executives surveyed in the U.S. on their “Biggest Risks”, the
following results were found:
- 76% identified COVID-19 as the biggest ongoing risk, followed by cyber threats at 44%, restricted or sanctioned entities at 36%, natural disasters at 30%, and single supplier or country concentration risks at 28%. Other risks fell below 20%.
- This follows roughly the same order for future risks, with 66% identifying COVID-19 as the future risk companies are preparing for, followed by cyber risks at 48%, restricted/sanctioned entities at 34%, and geopolitical events at 32% (this was the largest jump from 20% now to 32% in the future).
If these results are even close to being a high priority, then your own “Supply Chain Resiliency” shall be a well funded and continuously measured Business Unit within your Enterprise, in 2021 and beyond…
