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Understanding and Managing risk in the global supply chain

Posted on August 26, 2016 10:00 am;

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By Rebecca Langdon


Good logistics is about detailed planning and anticipation. All supply chains are subject to external

threats which could cause your business big issues. One unforeseen issue could throw your entire

operation into disarray (and do some significant reputational damage with your clients). Accordingly,

while it is unreasonable and impossible to expect every scenario to be anticipated, it is important to look

at the most important supply chain risks and produce a contingency plan in the event they happen.

Within this article we will explore the main risks to any global supply chain.


Global Logistics

Logistics even restricted to one country can have many risks that threaten successful operation. When

that is expanded to multiple countries, the risks become more complex and also interlinked. For

example, you may be due a container of a certain product in Calais, but the French port authorities are

on strike so there is a delay. You finally get the shipment through the port and it is due to go to the UK

by cargo ship, however due to people trying to illegally cross into the UK from Calais, the cargo ships are

all delayed for additional vehicle searches. This is just one example but you can see that when goods are

travelling many miles and being handed off multiple times it is a complex risk to manage safe and timely



Economic Stability

If you are not operating within one unified economy, then you will be subject to the following:


- Exchange rate fluctuations

- Taxes such as VAT and customs duties

- Country trade agreements


These macro issues should be easier to predict as there will be trends, patterns, and warning signs. Of

course when there is a catastrophic event such as 9/11 or the global financial crisis that is impossible to



Global Disruptions

These do not happen frequently and they are very difficult to predict and guard against. Examples are

floods, tsunamis, earthquakes, drought, and terrorist action and so on. It is possible to consider and

evaluate some of these potential risks and to mitigate if you think the scale of the risk is sufficient. For

example, you may have a single warehouse which is fairly close to a large river. It would be prudent to

evaluate the likelihood of the river breaking its banks, and thereafter the likelihood of that water

reaching the warehouse. If the risk is high, you may consider purchasing sand bags, or if the risk is

intolerably high you may consider resituating, or taking on a second warehouse.


As you can see, there are a myriad of risks to consider with respect to managing a global supply chain.

To grow your understanding and skill in the effective identification of risks in the supply chain, you may

want to consider a professional qualification in Supply Chain.


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