The following is the summary of an article titled, "Impact and Ubiquity: Two reasons to proactively manage risk" by Patrick M. Bryne.
Minimizing supply chain risk is the most important issue in
global business today. This is shown by a 2006 Accenture study that states 73%
of companies have experienced disruptions in their supply chain. One third of
these companies took one month to recover from the disruption and almost all
said that it hurt their bottom line.
Some companies have not even taken into account the risks
involved in a global supply chain; some even say that there global strategy
increases their supply chain risks. As a result, many companies are vulnerable
to supply chain disruptions and have no plans in place to mitigate the risks.
This is the case even though hundreds of companies have seen significant
disruptions in their supply chain that resulted in drops of their stock price.
The largest disruptions seem to be natural disasters, supply
chain partners, and raw materials (see graph below).
With companies that do have a supply chain strategy to
mitigate risks, they are prepared to do the following:
– Manufacture
locally as well as globally (62 percent)
– Source contingent suppliers and/
or logistics providers (61 percent)
– Increase inventories and safety stock
(53 percent)
– Establish a more geographically
distributed supply base (50 percent).
– Build a
– Implement more/better forwarding
and hedging strategies (42 percent).
– Increase the level of insourcing,
i.e., returning to home country manufacturing (38 percent)
Source: Byrne, Patrick. “Impact and Ubiquity: Two Reasons to
Proactively Manage Risk.” Logistics Management April 2007.