We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • INDUSTRY PRESS ROOM
  • SUBMISSIONS
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • CSCMP EDGE 2022 Startup Alley
    • Upload your video
  • PODCAST ETC
    • Podcast
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • Reflections
      • SCQ Forum
    • Mobile Apps
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • CSCMP EDGE 2022 Startup Alley
    • Upload your video
  • PODCAST ETC
    • Podcast
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • Reflections
      • SCQ Forum
    • Mobile Apps
Home » Two approaches to mitigating supply chain risk
Afterword

Two approaches to mitigating supply chain risk

March 6, 2015
Peter Bradley
No Comments

Over the last couple of years we've heard many stories about businesses seeking to compress their supply chains and reduce risk by bringing sourcing and manufacturing closer to home. Other stories, including some that we have published, have looked at ways to minimize the risk inherent in supply chains that span vast geographies, including volatile regions of the world.

Recent violence in Ukraine and, looking a bit further back, the tsunami and floods that caused so much human tragedy and business disruption in Japan and Thailand, offer pressing reminders of the risks inherent in globalization and, conversely, in concentrating sourcing in small geographies. In each of those cases, the human cost is the most crucial concern, but the business costs are very real as well. Ukraine may not be a major supplier to Western businesses, but Russian threats to curtail the flow of its abundant fossil fuels through that country have left much of Europe very nervous. Japan and Thailand don't get as much press as they once did, but their businesses remain major suppliers to some of our most significant industries. Major disruptive events in places like those shake up businesses everywhere.

In a recent white paper from the Global Supply Chain Institute at the University of Tennessee, authors Ted Stank, Mike Burnette, and Paul Dittmann examined why so many globalization efforts have faltered. They conclude that companies that focused on cutting costs often overlooked many of the potential risks inherent in lengthy, complex supply chains. The authors believe that as more companies come to recognize those risks, we are likely to see a further expansion of regional procurement and manufacturing centers—a conclusion closely related to one developed by Professor Yossi Sheffi of the Massachusetts Institute of Technology (MIT) in his 2012 book Logistics Clusters.

Global supply chains aren't going away, of course. When well run, they offer too many advantages in terms of both cost and quality. What companies with global supply chains have learned is that they need better ways to evaluate all the real risks involved. But tools to help executives do just that have only recently become available. In the Dialogue interview that appears in this issue, Louis R. Ferretti of IBM's Integrated Supply Chain business unit says that he was surprised at the lack of such tools when he began looking at supplier risk assessment some years ago. As a result, IBM decided to develop its own.

The UT white paper describes another method: applying the EPIC (Economic, Political, Infrastructure, and Competence) framework, which is designed to help supply chain managers assess risk in regions where they are considering doing business.

Many companies rushed into globalization with unwarranted optimism, and they have learned some hard lessons. Regional supply chain networks and new tools for evaluating risk will help improve supply chain performance. Those that adopt such tools will be better prepared to manage the as yet unknown risks that may lie ahead.

Global

Recent Articles by Peter Bradley

Revisiting the TPP

Building resilience into the supply chain: interview with Yossi Sheffi

A champion for supply chains: interview with Kevin Smith

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • Survey: parcel delivery drivers are frustrated by using their own smartphones for work

  • Survey: most Americans unaware that truckers face shortage of parking spaces

  • Best practices in logistics sustainability

  • Supply chain executives not yet seeing expected results from technology investments

  • Postal Service plans to seize items mailed with fake stamps

Featured Video

20221107korber large vs

Enhancing Customer Experience with Your Supply Chain Strategy

Viewer Contributed
With the rise of e-commerce, many businesses have had to transform their warehouses to handle online orders in addition to regularly scheduled inventory shipments. This means warehouses need more information than ever before to ensure they can meet customers' needs. As a result, companies need to select warehouse...

FEATURED WHITE PAPERS

  • Five tips for parcel success in 2023

  • Guide to Pallet Rack Safety

  • 3PLs: Complete Orders Faster with Flexible Automation

  • A shipper's guide to navigating post-pandemic holiday freight

View More

Subscribe to Supply Chain Quarterly

Get Your Subscription
  • SUBSCRIBE
  • E-NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing