Navigating and managing disruption in supply chain management

The pandemic has brought a heightened awareness to the need for companies to have effective and efficient plans for potential disruption.

While the conversation of managing disruption in supply chain management is nothing new, it finally has earned the attention many believe it has needed for the past two or three decades. Many cases over the last year have shown first-hand that how companies deal with disruptions can make or break their future. Although the pandemic may be considered a black swan event when it comes to disrupting supply chain, that should not discount the importance of effective risk management and properly implemented business continuity plans.

Failure to recognize and understand the risks your organization faces will likely lead to unnecessary disruptions and subsequent loss of profits. Even with the most structurally sound strategies in place, a supply chain company is destined for failure if it lacks a fully completed risk assessment and disaster plan.

Supply chain disruptions can come in various forms that affect companies differently depending on factors such as their location, their product and their supplies. A disruption can be defined as an unforeseen breakdown, malfunction or failure of one’s production and/or distribution that negatively impacts the supply chain process. So, what disruptions should your supply chain management company plan for? That question might not have an easy answer, but companies can begin protecting themselves by supply chain planning and optimization around the risks currently trending which, according to DHL’s Resilince360 Annual Risk Report, include the following:

Environmental

Climate change has been a global concern and a growing risk as it relates to supply chain management for years. Climate change affects not only the intensity but also the frequency of large-scale natural disaster disruptions such as wildfires, tropical storms, droughts and hurricanes.

From climate change comes tougher environmental regulations heavily affecting many of the production and distribution channels of supply chain companies. There are countless rulings issued by the Environmental Protection Agency, as well as numerous federal laws, and a growing number of global regulations that are becoming more stringent.