Tony Pelli, Practice Director for Security and Resilience, BSI
The third key question posed by BSI’s latest annual Supply Chain Risk Insights Report (November 2021) is, “How do we best address the key geographic and sector pain points in a changed and changing world?”
Today’s supply chains can be long and complex, with organizations in different sectors and geographies facing varying supply chain challenges. Take retail organizations, for example. One major challenge facing them is around sourcing products that are customized or bespoke for individual customers – think of high-end fashion. Maintaining micro supply chains that may be required for such business-to-consumer interactions creates complexity, so it’s crucial to build resilience when you’re looking for suppliers. How do you build resilience in from the beginning and make it part of the supplier selection process, rather than it becoming an afterthought?
Now, consider pharmaceutical companies, which operate under intense regulatory scrutiny. The biggest challenge for them might be reaching the next generation of customers – perhaps patients in middle or developing countries such as China or Brazil. To do so, they are facing a whole new range of supply chain risks, from counterfeiting and diversion of their products to outright theft. They need to understand that they’re not dealing with the same sort of supplier, distribution and risk environment they encounter in Western Europe.
Identify pain points
Retail and pharma are just two sectors among many that illustrate the importance of identifying supply chain pain points. Organizations often don’t understand where the problem areas lie. From factories, distribution centres and shipping to port handlers, agents and subcontractors, there are many variables, meaning they don’t always know why or where goods have been lost. As a crucial first step, you need to understand the dynamics of the supply chain. Only then can you identify the pain points and put robust control measures in place.
The second step is to establish effective communication between all parties. Gather accurate and timely information throughout the supply chain, ensuring that you address the pertinent questions, such as, “Where’s the product?” “How is it being transported?” or “What are the temperature control elements?”
Set common goals
It’s essential to establish objectives and strategies across the company so that the entire business is fully integrated in a unified approach. This demands a common understanding of what the organization is trying to achieve, the standards it’s trying to uphold and the key reporting requirements of its stakeholders. Common goals and objectives allow companies to move forward even when challenges arise. But if you don’t have the right lines of communication, you don’t share those common understandings. Decentralization and devolved management can also be an advantage, allowing you to develop people to have the skills, knowledge, and insight to make effective decisions in a crisis, rather than waiting for a chain of command.
With fast-moving global issues constantly altering the supply chain landscape – from the climate emergency and COVID-19 pandemic to digital transformation and geopolitical tensions – it’s important to understand what plans suppliers have in place for different types of disruption or unforeseen events. How are they vetting their own suppliers for such issues and how are they prepared to deal with problems such as raw materials shortages and shipping delays?
Forward planning is vital, and one successful approach BSI has developed for clients is to run pilots with a few of their key suppliers, so we can establish what works for them. If we can pinpoint that for the most critical and traditionally successful suppliers, then it can be rolled out to others as well. And that’s true of any supplier improvement programme – pick what works with the most critical ones and then see if you can implement it more widely.
As a business leader or supply chain professional, if you want to manage the ever-changing threat landscape, you must stay up to date on risk trends, for example, by making use of global supply chain risk intelligence provided by tools such as BSI Connect Screen. You can then apply this knowledge, alongside a rigorous supplier assessment process, to ensure your risks are managed and standards are maintained. To borrow from Thomas Jefferson, when it comes to supply chain pain, the price of freedom from it is eternal vigilance.