March's Suez Canal crisis amazed a global audience by dramatically illustrating how a single event could disrupt supply chains around the world. But its message was no different than that of the COVID-19 pandemic: It’s time to reevaluate the interconnected ecosystems of businesses everywhere — or risk succumbing to the next disaster.
Let’s look at a few parallels as an opportunity to learn, grow and prepare for the inevitable.
Plan for Bottlenecks
It’s important to remember that the Suez Canal event was a particularly dramatic instance of how risk can impact supply logistics. However, it was also a sure reminder that businesses will never be able to avoid every risk, no matter how prepared they are.
Leaders should work with their teams to anticipate as many “what if” scenarios as possible and create plans for managing each circumstance. Learning from risks each time they happen will continue to improve how companies in all sectors deal with situations in the future.
Specific to supply chain risks, diversifying your supply pipeline can help manage unforeseen risks and build resiliency. When paired with integrated risk management capabilities, where all data sources and aspects of the supply chain are fully integrated, it’s much easier to oversee the deep complexities of supply chains and risk solutions.
The Waters Aren’t Yet Calm
While the Ever Given ship has been freed for weeks, supply chains are still caught feeling the ripple effects of the Suez Canal incident — and there are likely some effects we haven’t yet seen. Therefore, supply chain managers should continue to be on high alert for lurking risks.
In the meantime, companies during this time cannot just rely on one logistics partner. Both the pandemic and the Suez Canal event created much more awareness about the importance of diversification and the sheer number of industries affected by a major supply chain interruption. Leaders should continue to check in with their third-party partners — each of which compounds a company’s overall risk — to better understand their partners and head off any potential risks. Even longtime, trusted partners aren’t totally immune to risk.
Another area to watch is in regulatory responses — stay attuned to new government regulations coming out of the pandemic. Under the current Biden administration, the U.S. government is taking steps across several government agencies to report on the efficacy of supply chains, in order to promote a more diverse and risk-ready system. Several levels above this, international supply chain regulations will be more difficult to control and complicate the ecosystem, but will ensure the world is ready for the next pandemic-level disruption.
Get Ready for the Next Big Wave
If there are any winners, companies that are able to learn from this event and reinforce their supply chains have the most to gain. The next big wave for companies looking to create or maintain a competitive edge are those who learn to thrive on risk — studies have shown that companies can even change positioning in their ranking coming out of a crisis.
With how deeply complex and digital-first supply chain logistics have become, many leaders have begun to put artificial intelligence and machine learning to the task of integrated risk management. Software is an effective tool for workers in a home or office environment, but not every industry can adapt this way and solutions aren’t always that simple. Other companies are looking to their front-line workers as sources for intelligence on risk in the supply chain — it is this segment that is the first line of defense when it comes to a situation like the Suez Canal event.
No matter the solution or method for innovation in the supply chain, the bottom line goes all the way up to C-suite. Today, top executives want to be able to quantify risks to a granular degree. They want to know the exact cost of getting a shipping vessel stuck somewhere — not just the qualitative level of risk. Keep focused on supply chain innovations that can be measured and quantified.
Leaders should study the chain of events that occurred during the Suez Canal obstruction and learn from your mistakes and the mistakes of others. Within the larger scope of the pandemic, now is a critical time to think through your supply chain and find ways to reimagine your business, partners, and integrated risks throughout the system. No matter the size of the canal or the shape of the container ship, you cannot stop risk from happening — but you can start leveraging that risk to help your business get an edge.
Bruce Dahlgren is CEO of MetricStream.
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