In the current multi-tier supply chains, production techniques and sourcing wants are in most cases spread out across several suppliers. These suppliers operate in more than one country, and at stable and transparent costs to maximize financial efficiency. The Covid 19 market volatility and the sweeping regulatory changes have driven most organizations towards re-evaluating their intricate global supply chains. This re-evaluation aims to enable those companies to gain quick control of the new and substantial supplier hazards.
Although diverse chain supply is vital for a firm’s success, companies need to assess and understand the associated risks in their digital and physical supply cycles. The majority of the firms struggle to evaluate risks beyond their direct contractors. For instance, what Foxconn is doing to Apple exposes those companies to threats associated with many chains of sub-suppliers that exist below primary suppliers. In supply chains, potential risks vary widely; for example, a foreign company could buy a provider of a critical component and introduce unethical trading practices.
Companies that can’t find a new way of evaluating and reacting to the fast-changing supplier threats are likely to undergo a severe business interruption, which might lead to bottom-line consequences. Without continuous and noticeable visibility in the supply chain cycles, manufacturers and government agencies are at risk of national security and economic impacts.
Marketing Efforts To Prevent Risks
In recent months, many businesses have taken several measures to mitigate supplier threats. As Covid 19 remains to be a severe business threat, the steps are imperative for a firm to be functional with fewer interruptions.
Measures Taken To Mitigate Risks
- Creating an inventory of raw materials and finished goods to keep more commodities for customer and themselves and preventing future panics.
- Facilitating in-depth and continuous supplier risk evaluation by leveraging digital tools. According to PricewaterhouseCoopers’ survey, more businesses are opting for automatic means in the supply chains to deal with the Covid 19 threat.
- Making manufacturing simpler by focusing on the essential products ensures that those factories do not face pressure due to fewer workers providing maximum output.
A debate has been going around about the need to reduce the geographical concentration for globally accepted supply chains, particularly in countries like China. A good example here is apple, whose manufacturers have been working with the China-based suppliers because of the country’s extensive, efficient logistics, supplier infrastructure, and cheap labor force. For this geographic reliance reason, companies find it hard to identify associated dangers and move production to other places as required.
Creating Resilience In Supply Chains
Organizations should make their supply cycles more flexible, transparent, and agile from a risk viewpoint to move from the crisis. Therefore, it means that companies need to create a de-couple from China for them to get a high definition image of their entire third-party environment from both ends and identify the exact supply chain risk points. For instance, China-based companies gave over three thousand force majeure certificates at the start of the epidemic. This greatly affected the supply chains of the corporations that relied on those suppliers.
Additionally, the Covid 19 pandemic has made continuous risk monitoring a mandatory for most suppliers. As per the World Economic Forum’s recent report, most businesses worried about data fraud and cyberattacks as the working patterns shifted. Therefore, they recommended that enterprises establish a culture of observing cyber hygiene.
Generally, businesses with global supply chains should be aware that there are many national security and economic risks. The risks include hackers, trade friction with other nations, etc, so firms need to keep them in mind while assessing their supply chains. The only way to overcome potential business disruptions is by frequently monitoring your supply chain cycle using modern technology. A good example is Intros, which has come up with the first multiples, AI-powered third-party risk management platform, which aids corporations to monitor their complex supply chains quickly and easily.