Given the global nature of business and the fact that over 80% of the world’s manufacturing takes place in coastal areas, our production is more concentrated in these areas and more exposed than ever to hurricanes, flooding, earthquakes, tsunamis and typhoons. But it’s not just exposure to natural disasters that are a concern to us.
What happens when a supplier’s business fails or when they are constrained on a component or commodity? When trade regulation changes or when oil prices spike or labor rates rise dramatically and affect a plant in a far-flung region of the world? And what happens when a number of incalculable events occur that effect our operations?
With the potential for all sorts of supply chain risks occurring at some point in your value chain, how do you prepare? Is it possible to identify all the possible events and then mitigate this risk in your supply chain.
Obviously, nobody can predict what events will occur in their global value chain. But, you can identify all the points in your value chain and see which ones are the most important and which ones are the most at risk and prepare accordingly.
Companies need to know our level of exposure to these occurrences. It’s pointless to try to identify all the possible risks or occurrences and try to assign a dollar figure to each. We have developed a methodology using our proprietary Risk Exposure Index™ which in conjunction with network analysis helps quantify the exposure at each node of the supply chain. These nodes can be suppliers, internal or external warehouses, manufacturing plants, assembly locations and hubs, all critical points in the supply chain. This analysis enables companies to pin point the trouble spots and create reliable strategies for mitigating the risks.