Global supply networks are unravelling before our eyes, as the coronavirus pandemic leaves businesses shuttered and workers idled. For supply chains, the consequences stretch from end to end.
More than 80% of industrial producers are experiencing supply problems, along with a 38% increase in production delays, according to data from artificial intelligence software company riskmethods.
Even as border restrictions and logistics delays gradually begin to relax, new threats are emerging, like competition for resources and financial stability. Data show a 44% rise in force majeure events.
Evaluating potential risk — and identifying where and how COVID-19 could strike your supply chain — will make it easier to manage uncertainty and plan ahead. Here are some steps to consider.
What challenges do you need to solve first, and what measures can you take short-term? Scan your supply networks to pinpoint where flows are affected by COVID-19, asking these four essential questions:
Some companies might find it hard to identify supply-chain risks because they don’t have visibility into their suppliers and sub-suppliers from Tier 2 or Tier 3. It's becoming increasingly difficult to compile and manage these lists manually, but modern AI-supported risk identification tools can help.
Next, consider your mid- and long-term business risks. Have you overlooked any hidden dependencies or threats to delivery of goods? For example:
Once you’ve identified current and potential risks, it’s time to take action and prepare for the worst. This includes investing in ways to develop, implement and maintain a comprehensive risk management strategy — including technology to help recognize what threat might be coming along next.
Combined with a business continuity plan, these measures will strengthen your business resilience as you move from crisis mode back to strategic management.
We are witnessing supply-chain upheaval on virtually every level, but severing the threads of global supply chains is short-sighted. Sole-sourcing close to home will not increase stability nor business resilience.
Although uncertainty surrounding COVID-19 still looms, it’s best to fix broken links in your global supply chain with proactive risk management to maintain strength and flexibility as much as possible. Rebuilding supply chains is much more complex than shutting them down.
Read more about the riskmethods Coronavirus Supply Chain Visibility Kit, which uses AI to send risk alerts and can be activated within 48 hours.
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