Industry Talk

Regular Industry Development Updates, Opinions and Talking Points relating to Manufacturing, the Supply Chain and Logistics.

Businesses can’t rebuild supply chains without knowing who they are partnering with

Organisations should resist “reacting” too quickly to the turmoil impacting the geopolitical climate as it may create new and even larger unforeseen supply chain disruptions and vulnerabilities.  Instead, they might be better off, by falling back on tried-and-true supply chain risk management principles of avoiding, mitigating, transferring, or accepting risk to manage their risk exposure.

This starts with a prioritization of suppliers to better understand the risk, its impact and what mitigation strategies are most appropriate.  But critically, too many corporations engage with this question on a surface level. They might try to map out where their suppliers are operating, who their suppliers, and their suppliers, are buying from so they have a more complete picture of their risk posture.  Our research shows that, for the majority of businesses, their intelligence ends at their direct suppliers. Firms are not going deeper in the layers of the supply chain and thus are exposed to risks they may be unaware of.

Factors behind this problem range from outdated technology to problems in cooperating on supplier data with direct suppliers.

Taking a more proactive, modernised approach to supply chains is critical. It will help firms to comprehensively ask the biggest questions affecting supply chains today including: Who am I doing business with all the way down the supply chain? Is there a diamond supplier risk?  What specific country risk exposure do they have in their sub-tiers? Are there human rights issues in their supply chains?  To what extent are they exposed to the new US tariff regime?  How are they affected by EU climate regulations? Do they have exposure to sanctions from the war in Ukraine?