Challenges as Catalysts: Managing Unpredictable Supply Chain Disruptions

Many businesses have been treading water since the seismic disruption of the pandemic. Now, supply chain management has risen to the upper echelons of boardroom agendas, and for good reason!

By staying one step ahead, acquainted with the challenges and risks that permeate the logistics landscape, you can fortify your business. This expert-backed guide will prepare you to weather any storm.

The Road Ahead

Many factors can influence global supply chains, leaving your company stranded without a lifeline.

By nature, risks are unpredictable . Therefore, it is imperative that leaders mitigate, adapt to, and learn from both forthcoming risks and existing challenges. 

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Geopolitical Friction

Geopolitical events, small and large, send a ripple effect down your supply chain. What’s at stake? Local and global crises bring forth uncertain operating environments, higher costs, increased complexity, reduced efficiency, and increased regulatory burdens. 

‍Global supply chains issues, including the war in Ukraine and geopolitical tension with China, are costing Australian companies $11 billion a year, according to new analysis by TMX Global.

In the PwC 25th Annual Global CEO Survey:

At TPM23, conversations circled around the current geopolitical turbulence and its material effect on businesses' bottom line.

What you can do:

Watch geopolitical trends and events in your key supply locations. 

Identify risk exposure by having visibility of each link in your supply chain. 

Assess each node in your supply chain’s vulnerability to disruption  and your brand's capacity to absorb or mitigate each risk.

Plan strategies to adapt operations to changing global or regional conditions with little notice and incomplete information. 

Spread the risk by disaggregating your supply chain. Hunt opportunities to manufacture goods across different regions and retain core segments of the supply chain in local territory where possible. 

The bar for explaining where you are and why you’re there has never been higher. Be prepared to justify your brand's global footprint to external and internal stakeholders. 

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Cyber Risk

With teams becoming more digitally interconnected than ever, the logistics sector finds itself vulnerable to a rising tide of cyber-attacks, growing in scale, complexity, and disruptive potential.

The impact of these cyber attacks is already surfacing, exemplified by Japan's largest port by total cargo throughput, The Port of Nagoya, being crippled by a cyber attack in early July 2023. Container operations at the port ground to a halt as ransomware held its systems hostage, demanding payment in exchange for recovery.

In just the past few years, major organizations have fallen victim to ransomware, resulting in millions of dollars in damages. Some notable cases include:

• The 2019 SolarWinds cyber attack resulted in widespread damage as malicious actors compromised the software company's supply chain, infiltrating numerous organizations, including government agencies, with far-reaching consequences for data security. The cost of this breach has been estimated to have cost as much as $100 billion. ‍
• In 2021, the Kaseya VSA remote management service experienced a ransom attack that severely impacted the company's production capabilities, leading to disruptions for downstream vendors across 17 countries.

• The 2021 JBS cyber attack, resulting in a temporary shutdown of operations, impacted one of the world's largest meat suppliers and led to a ransom payment of $14.2 million to the attackers.

In the wake of severe supply chain disruptions and cyberattacks, it’s time your team takes a closer look at your supply chain.

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What you can do:

Define user roles clearly and implement security controls to restrict who has access to your systems, as well as what level of clearance or privilege they have. 

Collaborate with vendors in your supply chain network to develop a unified disaster recovery plan to assure business continuity.

Establish backup controls to safeguard your data backups.

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Climate Risks and Extreme Weather

From floods to fires, extremes are increasing in every category. 

This is especially concerning when only 11% of suppliers are fully prepared for weather-related disruption according to the Harvard Business Review. 

• ‍Unprecedented Australian bushfires in 2019-2020 caused over $110B in economic losses. Highways and ports shut down, production lines were damaged, and consumer spending plummeted. Critical freight routes closed, forcing companies to seek alternative pathways.
• The Texas freeze in 2021 caused the worst unplanned blackout in U.S. history, forcing railroad and factory closures for days.
• More recently in June 2023, more than 400 fires burnt across Canada, upending their oil and gas operations, the area's main economic driver.

So how can you keep your supply on track, even when Mother Nature is doing her best to disrupt operations?

What you can do:

Map out your supply chain with end-to-end visibility. 

Invest in scenario planning to understand your options in the event of an extreme weather event. Evaluate the different risks to different nodes and locations in your supply chain. 

Determine where your weaknesses are and prioritise the actions that can be taken to strengthen your supply chains weak spots. 

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With these new emerging risks - geopolitical friction, cyber crime, and climate risks - it's evident that traditional approaches alone are insufficient. Now is the time to take proactive measures and embrace innovative solutions to protect your supply chain from these challenges.

The Australian Industry Groups (Ai Group) 2023 survey of Australian CEO Expectations found that 88% of respondents are investing in measures to reduce their supply chain vulnerabilities over the coming 12 months.

Don't be left all at sea. Arm yourself with the right advice and technology to better manage supply chain disruptions by contacting our team.

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References

McKinsey & Company. 2021. Supply-chain resilience: Is there a holy grail?. https://www.mckinsey.com/capabilities/operations/our-insights/supply-chain-resilience-is-there-a-holy-grail

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PWC. 2022. How to manage supply chain risk during geopolitical unrest. https://www.pwc.com/us/en/services/consulting/business-transformation/library/supply-chain-geopolitical-unrest.html#:~:text=Global%20or%20regional%20disruptions%20can,markets%20and%20increase%20regulatory%20burdens. 

Everstream analytics. 2023. Climate risk management for extreme weather. https://www.everstream.ai/articles/climate-risk-management-extreme-weather/ 

TPM TV. "Episodes of exclusive TPM content". March 3rd 2023. https://events.joc.com/tpm/video/tpm-videos.html 

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