Executives worry about supply chain risks

Supply chain disruptions were noted as the biggest risk to overseas business operations, according to a recent survey of high level executives conducted for Chubb Insurance.
Nineteen percent of the respondents listed supply disruptions as the number one risk of relying on overseas business partners. Other risks included data breaches, political instability and natural disasters.
This data wouldn’t really be newsworthy, but the Chubb survey also found that only 56% of the responding companies have a business continuity plan that addresses overseas risks, and 22% of those companies have never tested it.
Even considering the potential bias of a risk survey from an insurance company, there is clearly a gap there.
If you think your company may not be prepared for managing supply disruptions, a good first step is mapping your supply chains deeper than the first tier or two. Too often, real surprises come from problems at suppliers we didn’t even know we had in the chain. Think about the pigment factory closed by a tsunami in Japan, or the high temperature resins that disappeared when a plant in Germany burned.
If you know your chain, you can run simulations to assess the impacts of potential events.  The best practice is a detailed survey and a predictive model indicating which suppliers have the highest probability and impact.  I think the highest risk suppliers are sole source suppliers with a single location and a unique technology  Your mitigation plans should take into account both the likelihood of each event and the profit and cost impact it would create.

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