| Many organizations have spent years streamlining | | | | entire length of SC's, and are as diverse as political |
| operations, re-engineering processes, integrating with | | | | instability, exchange rates, carriage capacity, shelf life, |
| partners, implementing enterprise systems, and | | | | and customer demand. The risks will be the subject |
| moving production to low-cost, offshore locations. | | | | of future Supply Chain Experts (SCE) blogs but |
| They have done all of this in an attempt to improve | | | | include: |
| the service they provide to customers at a more | | | | Terrorism |
| competitive cost. However, creating a global supply | | | | Piracy |
| chain has brought new risks that you may not have | | | | Currency Fluctuation |
| encountered before. | | | | Government Instability |
| More recent events such as terrorism, strikes, piracy, | | | | Strikes |
| political instability in Third World countries, and last | | | | Quality Considerations |
| year's shutdown of West Coast shipping docks-have | | | | Energy Cost |
| awakened managers as never before to supply chain | | | | Transportation Problems |
| (SC) risks, some of which had been introduced or | | | | Natural Disasters |
| heightened by the very actions companies had taken | | | | Rework Costs |
| to drive costs out of their SC's. Currently there are a | | | | Supply Chain Complexity |
| number of significant well-documented challenges | | | | Global Interdependence |
| facing international and domestic transportation | | | | Balancing these competing priorities means that it's |
| markets such as rising freight rates, infrastructure | | | | impossible to eliminate risk entirely. But there are |
| disrepair, and the new cost of security in both time | | | | steps you can take to mitigate risk while keeping |
| and money. | | | | your SC costs as low as possible. First, however, a |
| The simple fact is that in today's longer, more global | | | | little background on the nature of risk and how |
| SC's, product moves over greater distances and | | | | companies seek to deal with it. It may be time for |
| across more borders than in the more localized SC's | | | | you to rethink your global supply chain strategy in a |
| of the past. The coordination and execution required | | | | manner that mitigates some of these risks and |
| for international shipments has always been a | | | | optimizes your ability to consistently deliver product |
| challenge, but now we find that market conditions, | | | | to your customer at the lowest possible cost. |
| security considerations, and regulatory pressures are | | | | So, what can you do to mitigate these risks while |
| converging in such a way that increase risk | | | | insuring low cost leadership? You can call SCE's who |
| significantly. But "Many risk factors have developed | | | | will help you assess the risks in your SC; they will help |
| from a universal pressure to enhance productivity, | | | | you think strategically about risk versus cost, they |
| eliminate waste, remove supply chain redundancies, | | | | will help you broaden the cooperation with the trading |
| and drive for cost improvement," says , of | | | | partners in your supply chain, help your organization |
| Productivity Constructs of Palm Springs, California. | | | | understand the trade-offs and make better decisions |
| Today an inverse relationship between risk and | | | | that will insure your ability to take care of your |
| efficiency supply chains has been established; supply | | | | customers, and help your organization understand |
| chain managers can no longer focus solely on cost | | | | that you cannot ignore risk solely because it is |
| reduction-any calculation of a supply chain's return on | | | | difficult to quantify. |
| investment must also take customer satisfaction into | | | | Your organization should be concerned about SC risks |
| account. "We're trying to make sure we operate the | | | | and SCE's can help your organization design an |
| SC more efficiently and decrease costs as we | | | | effective system that creates a balanced cost/risk |
| increase service levels to customers," says Roy | | | | relationship that will protect your organization and |
| Strauss of Strauss Consulting. Risks exist across the | | | | your customers today and into the future. |