Head of Supply Chain Insight, Alistair Balderson, takes a look at highlights from IGD’s recent report series, Vulnerabilities in the global supply chain.
All change, please
We are often told that change is always with us. The usual quote is from British Victorian statesman Benjamin Disraeli: “Change is inevitable. Change is constant.” Although I prefer the version my son used as his Thought for the Week at Scouts recently: “Change is inevitable. Except from a vending machine.” (I’m pretty sure he didn’t come up with that himself).
It also seems to be a given that change is coming at us more quickly than ever before. In that circumstance, it can be hard enough to think about the strategy you need to keep up with or lead the change. It’s harder still to look further afield at the wider profile of risks facing the business.
This is the background to a recent series of reports, Vulnerabilities in the global supply chain, published on IGD Supply Chain Analysis. We hope these will help your risk management strategies, looking both inside and outside your supply chain to create action plans which acknowledge, mitigate and avoid potential problems.
Responding to external challenges
In the first two reports, we looked at a range of external vulnerabilities including geopolitics, global transport chokepoints, natural resources and the environment. The increasing volumes of international trade in our industry makes these vital areas for consideration. And as long as businesses maintain a long-term view, there are actions that can be taken, especially with some of the new technology that is becoming available.
An example here is the need to secure clean water for a growing global population; it is foreseen that current levels of water use will inevitably lead to shortages. The agricultural sector can play their part in reducing usage by using connected sensors which ensure water is targeted only where it is most needed. This will be essential given that 70% of the world’s fresh water is used for crop irrigation.
The effects of implementing supply chain strategies
The final report looks internally, turning attention to some of the risks that come about as a result of supply chain strategies that we implement. Some of these would be weighed up in the context of a specific project. However, we also need to be aware of the risks that come about or increase through steady incremental changes.
I will focus on two such risks here (specifically digitalisation and people), but of course you can find out much more by reading the report.
Connecting the world
Digitalisation – the increasing use of digital technologies to drive business processes – is creating amazing new opportunities for our supply chains. Connected systems, super-secure databases, rapid transfer of vast amounts of data, and advanced analytical engines to generate predictive insights. But these benefits come with risks, not least of which is cyber-security.
We’ve seen several incidents in the last two or three years of cyber-crime, malware attacks and data breaches. Increasingly these incidents are happening as a result of the Internet of Things, small connected devices that track assets, temperatures, moisture … the list goes on. If these devices are not fully secured, they can be hacked into and an opening is created to your wider network which does not rely on the traditional PCs and servers.
The problem here is that as individual devices (or suites of devices) are added to the network, cybersecurity may well be a key part of the project considerations. But as time goes on, that set of devices are connected to a new set, or the servers are upgraded, and through a series of incremental changes, weaknesses and gaps are introduced.
Your business: empowered by people
People are rightly described as a business’s greatest asset, and this will be the case even as we introduce more automation. But as organisations are streamlined and jobs are merged, changed or removed, we create a risk that many years of experience or capability are lost. Customer and supplier relationships are built fundamentally on trust between people, and the relationship can be put at risk when key people leave. Again, the case for and against each individual change may well be weighed up as it happens, but the incremental effect of several changes may only be seen subtly over time.
I hope this has given you an overview of the third report and enticed you to take a look at the series – take a look at reports one and two. In a fast-changing world, it is easy to put strategic risk management low on the priority list, especially if individual projects are well monitored. But we would urge all businesses and supply chains in particular to regularly review some of the risks we have highlighted, developing possible mitigation plans where you can.