People Innovation Excellence

Costly Supply Chain Disruptions
ISE Magazine – Volume 46: Number 03
By By Denis Hübner, Tobias Larsson, Stephan M. Wagner and Andrea Christ

The World Economic Forum (WEF) has named supply chain disruptions and vulnerability as one of four emerging risk issues that will affect the world’s economy and society during this decade. This held true because nowadays, modern supply chains are complex and tightly interconnected to one another, making it extremely vulnerable to internal and external shocks.

For companies, regardless of their industries, supply chain disruptions had devastating effect. A survey stated that 85% of the respondents from various industries from Germany, Switzerland, the UK, and the US suffered significant losses due to supply chain disruptions in 2012. Thus, it is imperative that companies prepare for potential supply chain disruptions. The first step is identifying and assessing relevant risks. This can be tricky and tedious, as there are possibilities to falling into fatal blind spots and overcautious actions. Once risks along the entire supply chain have been identified and evaluated, measures can be applied to deal with them.

Understanding the complexity of modern supply chains, professional tools might be needed to manage it. Experts have developed software tools that meet the needs of managers to support the risk management process with a holistic and unbiased view of the supply chain. Mitigation measures derived from this software tools analysis can support fast and sound decision making. Since many sources of supply chain disruptions are beyond human power like natural disasters, it is imperative to have timely and precise information to increase flexibility. Increased flexibility will build resilience. Therefore, the software tools should be connected to the internet, ERP, and transportation management systems.

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