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Low-impact Incidents Are One Thing, But Are You Ready for a Major Disruption to Your Supply Chain?

As manufacturers seek to source quality goods at the lowest cost, supply chains that were once confined to a single country or continent have stretched around the world. Managers have become adept at addressing recurrent risks—frequent, low-impact incidents such as demand fluctuations or supply delays that affect efficiency. However, they have devoted less energy to designing supply chains that prevent or mitigate the impact of disruptive risks such as labor strikes, political unrest, regulatory shifts, and natural disasters. These events can have severe and lasting repercussions on operations, so manufacturers would do well to devise strategies that alleviate this risk.

In the fluid environment found in many countries, disruptive events are a certainty; only the timing and magnitude are unknown. The challenge for manufacturers is to prepare for disruptive risks while maintaining the gains they have achieved from improved supply chain efficiency. Three strategies can help companies implement the necessary safeguards to reduce risk while improving performance.

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