2023 Supply Chain Insights: Part 1: Diversify to de-risk your supply chain
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We’ve gone beyond one single issue; all of these challenges combine to create a complex and fast-moving environment. As a result, diversifying your supplier base is now a business imperative if you want to de-risk operations. – Tony Pelli
February 9, 2023 - BSI’s recent Supply Chain Risk Insights Report reflects on the global impacts of cyber vulnerabilities, inflation, labor issues, and recent legislative requirements. In this series, we will address the most notable supply chain risks your organization must keep a close eye on to lead toward a more secure and sustainable future.
The global supply chain landscape
Today, the supply chain is struggling to keep up with an uncertain market. We have gone beyond one single issue and are now fending off the repercussions of changes across the board.
As disruptions within the labor force combine with the fluctuating costs for transport and energy and ongoing geopolitical uncertainty, organizations are struggling to adjust to now a very complex, fast moving, and higher-risk environment throughout the global supply chain.
Organizations can no longer take the reliability of their supply for granted; the landscape has changed forever. Being agile and having a leadership team that drives supply chain resilience and continuity is essential to survive.
How to diversify your supply chain
Diversifying your supplier network is now a business imperative to reduce risks within operations. The ongoing impact of COVID-19 in key countries such as China, as well as financial and geopolitical uncertainty, are still creating disruption to the overall distribution of goods as shipping bottlenecks, and labor shortages continue.
However, moving operations to other places, Vietnam and Taiwan for example, or nearshoring in places like Mexico also introduces a new set of challenges, so it is important that organizations understand and balance the risks correctly to make the right decisions for them.
There are several ways to diversify the supply chain and in turn make it, more resilient:
- Creating strong relationships with multiple suppliers: having a wide range of partnerships will help reduce the dependency on a single supplier, and mitigate the risk of a disruption, should that one supplier come under threat. It is recommended that organizations source materials from a range of geographic locations, so if a natural disaster were to occur in one location, there are ways to avoid the disruption.
- Implementing risk management strategies: which will enable organizations to identify risks, mitigate and manage them or respond to a threat if necessary. This should include supplier participation wherever possible.
- Reviewing the supply chain: regular monitoring of supplier practices will help identify and remedy risks that are identified in the risk management strategies.
Though there is no one strategy that will serve as a silver bullet and no one-size fits all solution for all companies, the steps outlined above are an effective way for companies to start mapping out risk in their supply chains, understand supplier practices, and working to reduce risk. A better understanding of their supply chain gives companies a competitive advantage, as it allows them to quickly take advantage of rapid changes in the external threat landscape.
In part two of our series, Mark Brown, Global Managing Director, Digital Trust, BSI will uncover why the increase of cyberattacks in the digital supply chain must become a top priority for organizations.
Download BSI’s Supply chain risks insights report here and listen to Intelligence Insights & Enhancements: A Preview of the 2023 BSI Supply Chain Insights Report with Jim Yarbrough, Practice Director, Supply Chain, BSI for a report summary. Register for our OnDemand webinar, BEYOND THE STORM: How organizations can transition from survive to thrive in 2023
For more BSI insights on other EHS and Digital Trust topics, visit our Experts Corner. For real time updates on top supply chain issues, register for BSI’s Connect SCREEN tool; this platform provides daily analysis on the latest and most relevant global supply chain trends.