Understanding and Managing risk in the global supply chain
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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.
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
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
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.