Addressing supply chain risks before they become liabilities

Posted on Apr 07, 2014

There's no doubt that global supply chains can maximize efficiency, but at the same time, it can increase risk, Forbes reported. Events in the past such as the Japanese earthquake and tsunami, the floods in Thailand, and now recently the quake in Chili have caused a greater concern for how risks can extend to other businesses.

When floods in Thailand occurred in 2012, many well-known electronic manufacturers suffered significant financial losses due to the shortage in the hard disk drive market, Forbes reported. The Japanese earthquake in 2011 that struck Fukushima resulted in extended disruptions in the automotive industry as well as the overall production of electronics equipment.


The world of supply chain risk is frequently evolving, with new liabilities at every turn. However, many of these risks, when exposed and addressed, can typically be avoided. Global supply chains can not only be affected by natural disasters but poor network design strategies, too, the source reported.

Don't focus on an individual part of the link 

To create a successful supply chain risk management strategy, companies should avoid tackling individual parts such as manufacturing, distribution, logistics or procurement. According to Forbes, several risks can be controlled across the supply chain network. Since all parts of a supply chain could affect business continuity, it's best not to focus on an individual area, but look at protecting the whole supply chain.

Risk management software could secure assets

Several businesses try to handle their supply chain risk on their own, but it requires someone who is well-trained in international locations, Inc. Magazine reported. Many companies are turning to risk management software to track and monitor their assets while across boarders. 

Kamran Farid, COO and co-founder of Edible Arrangements, needed help with business continuity and international locations for fruit and produce shipments. Farid needed to be able to monitor his supplies while making sure operations in the company's supply chain were secure.

"This is by far the biggest challenge," Farid told Inc. Magazine. "We need a partner that is a master in that market, because it's very important to have someone that can help further develop the brand. We say no to a lot of deals, but I'm okay with that. It's about quality."

Many small businesses operating within a global supply chain are unsure how to protect their assets especially when handling business in foreign countries.

"We assume that the culture and operations of another culture are similar to ours here in the U.S. and that is not always the case," Thomas Phelps, of Alloquor Supply Chain Consulting, told the source.

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