Supply Chain Risk 2.0 – Understanding Supplier Networks and Supply Connections

The Only Constant Will Be Supply Chain Volatility
It isn’t your imagination. Supply chain costs are on the rise. Sector prices have exploded from 2002 to 2011 with an average annual growth rate of 15% (See Figure 1).

This surge in prices has impacted profitability and complicated budget planning. Worse, higher prices have been joined by higher volatility in recent years as upside risk and downside risk have combined to create wild price gyrations.

Cost-trend analysis indicates that costs are more volatile now than they have been in recent decades. And, beyond volatile, today’s market is rife with potential supply disruptions, shortages, and potentially crippling disasters.

To survive in today’s complex and inter-dependent supply chains, companies need supplier and material insight that allows them to fully understand and act upon shifts in the market, mitigate cost risk, and ensure business continuity.

Keeping up with rapidly fluctuating costs is a challenging job, but it has to be done to protect profitability. The alternative is to become victimized by volatility and unforeseen supply chain failures.

Figure 1: Standard deviation of gold, silver, oil, aluminum, copper, coee, sugar, rubber, cotton, corn, wheat, lumber, steel scrap, steel plate, HR carbon steel sheet. Source: IHS