Managing Risk in the Global Supply Chain

Over the last decade, many companies faced extreme supply chain challenges that stretched their capabilities to the breaking point. Both the preponderance of natural disasters and huge economic swings caused extreme challenges across the supply chain.

These challenges have not diminished.

Supply chains, which once functioned almost on autopilot, face many dangers today in both the global and the domestic market.

This paper covers a wide range of risks in the global supply chain and offers practical advice regarding risk mitigation strategies and tactics. This advice is grounded in research that examined how leading supply chain executives identify, prioritize, and mitigate risk in the supply chain.

The research team distributed a questionnaire across a wide range of companies, including retailers, manufacturers, and service providers.

The researchers tabulated data from the responses of over 150 different supply chain executives. In addition, they completed in-depth, face-to-face interviews with senior executives from six prominent companies. Some findings were surprising.

For example, despite recent unprecedented challenges, it appears that many supply chain executives have done very little to formally manage supply chain risk. In particular,

• None of those surveyed use outside expertise in assessing risk for their supply chains
• 90 percent of firms do not quantify risk when outsourcing production
• 66 percent had risk managers in their firms, either in legal or compliance, but virtually all of those internal functions ignored supply chain risk
• 100 percent of supply chain executives acknowledged insurance as a highly effective risk mitigation tool, but it was not on their radar screen nor in their purview.