Manage supply chain risks well for a competitive edge
SummaryCompanies face up to $120bn in costs from environmental risks in their supply chains between 2021 and 2026, according to environmental disclosure platform CDP. The risks come from a variety of sources, including natural disasters and government policies.
The tragic meltdown at Japan’s Fukushima nuclear-power plant in 2011 had an unexpected but dire impact on car factories all over the world. Near the plant was the only factory in the world that made Xirallic paint pigment, a magical material that gives our cars a unique glint; it shut down. Subsequently, production in many car plants around the world ground to a halt as the brutal reality of third-party and supply chain risks hit home. About a decade later, China’s policies to combat covid triggered a significant migration of supply chains from there to Vietnam, Bangladesh, India and other countries. This diversification process paradoxically creates new risks as global companies seek out new and untested supply centres and partners. Supply chain risk is a modern day reality and can emanate from a variety of sources, ranging from natural disasters to government policies and a host of other unforeseen events.