Supply chain disruption has a major impact on production costs and timelines, as well as overall operational efficiency. It’s important to understand these issues and take the right measures to protect your company against future events.
This blog aims to empower readers to identify and manage the risks of supply chain disruption. We look at how disruptions can be classified according to their probability and severity. Then, we explore how to mitigate those risks effectively by prioritizing critical operations and fostering a culture of resilience.
Low – Low-severity events can affect a single supply chain segment or cause limited production loss and short-term impact. These can include a supplier closure, transportation delays or an unplanned shift in demand.
Medium – Medium-severity events have more significant impacts on multiple supply chains and can create longer-term losses. They can result from geopolitical conflicts, environmental events and other natural disasters that disrupt production facilities and transport networks. Or, they could be due to sudden and unanticipated changes in demand or a lack of resources to meet fluctuating consumer demands.
High – High-severity disruptions have severe, lasting effects on cost and timeframes, and may require businesses to alter their entire supply chain and operations to mitigate long-term risk. Recent examples of this include the COVID-19 pandemic and the subsequent lockdowns and supply shortages that affected many industries globally.
A disruption can impact any company that relies on a complex, global supply chain to turn raw materials into finished products. Companies that are unable to maintain efficient operations face decreased productivity, reduced sales and lost customer loyalty. When this happens, it’s important for directors to ask blunt questions about the integrity of a company’s supply chain. By improving forecasting, leveraging tech tools and reducing reliance on suppliers through diversification, leaders can prepare for the unknown and build resilient supply chains that are prepared to handle anything.
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