Suppliers are often in the dark about the multiple factors that affect procurement, production and provenance. You may have confidential relationships with your long-term suppliers, but they may not have a similar relationship with their suppliers, who may be hiding key information.
Or it may be that neither the buyer nor the supplier is aware of the impact that political, economic or even weather risks will have on their ability to deliver goods.
Ultimately, it doesn’t matter why the information is incomplete or wrong. It can be an honest mistake or a deliberate lie. Whatever it is, it can lead to companies failing to identify the factors that affect their business and their reputation, and making strategic decisions blindly.
If we are to rebuild the resilience of world trade, we need a far more comprehensive and universally shared understanding of risk.
Blind strategic decisions are made not only in the boardroom, but also in the factory.
Each department must stay on top of any development that could affect the business. Yet even today, with all the analytics and big data applications available to them, many are not. This is because modern supply chain analytics solutions focus on a limited number of factors and cannot understand how one affects the other.
Multidimensional risk analysis
Engage in multidimensional risk analysis. This is less of a technology and more of a technique, and involves pilfering a huge range of up-to-date data from a variety of reliable sources. Most importantly, it details how these risks interact and affect each area of the business. Let’s consider a few real-world case studies of this in action.
First there was a major global airline that at the start of the pandemic reassessed the risk of component shortages for its A380 fleet.
The airline assumed the main threat was global supply chain problems, but it wasn’t until we examined a whole range of data from multiple sources that we saw an equally critical problem: its second-tier suppliers were suffering from financial difficulties that could threaten their ability to deliver at all what.
There’s also the online retailer, which the newspaper exposed as having modern slavery deep in its supply chain.
This famous name takes its reputation incredibly seriously, and the story of slavery took him completely by surprise.
This demonstrates the limitation of traditional supply chain analytics technologies – especially when it comes to identifying risk across all levels of suppliers.
These two examples only scratch the surface of the types of risks that exist. There are also evolving geopolitical and macroeconomic factors, new health and safety and regulatory requirements, and more.
But removing the veil from the risks that surround so much of global trade is only the first step on the road to resilience. Buyers and suppliers must also use this insight to strengthen their relationships and collaborate on creative solutions to emerging problems.
For all the talk of restoring global supply chain resilience, this journey can only begin when each side has access to the truth, the whole truth – and nothing but the truth.