Increased globalization heightens supply chain risks and brings many challenges. As a result, you must protect the critical goods and services which are the lifeline of your business with multiple approved sources and action plans.
According to Gartner, “Although the outbreak is being compared to the 2003 SARS outbreak, China is now much more developed and integrated with the global economy, and the country has significantly improved its transportation networks.” Hence, the coronavirus will have a far greater global impact to supply chains than SARS did 17 years ago. As the epidemic hits the heart of the world’s tech supply chain and shakes things up at Apple,
Singapore’s minister of trade, Chan Cun Sing has a word for supply chain managers, “I think this is a very good lesson for everyone to look at the supply chain resilience.” Proper supply chain mapping serves both as a risk-mitigating strategy and a supply chain resiliency tool, and it should be a significant part of your defensive strategy.
“The best defense is a good offense.”
It’s a much-used adage that has been applied to many fields and is, in fact, part of the United States principles of war: Offensive action is the most effective and decisive way to attain a clearly defined common objective. Offensive operations are how a military force seizes and holds the initiative while maintaining freedom of action and achieving decisive results.
In other words, proactivity, or a strong offensive action, will ultimately hinder the opponent’s ability to counterattack, thereby acting as a defense and creating a strategic advantage. Today, more than ever, supply chain managers need to be proactive in mitigating risk, ensuring continuity of supply, and locating opportunities for improvements.
Supply Chain Mapping
Mapping your supply chain is an offensive move that adds resiliency and agility to your supply chain. It detects high-risk points of failure and establishes courses of action that increases responsiveness and limits blowback from disruptions.
Supply chain mapping is the process of connecting all sources of supply at every level of the value chain. It provides a complete, end to end picture of your supply chain, tracing every component from raw materials through to finished goods.
Think of it as your supply chain family tree. Much like understanding your DNA, supply chain mapping affords you invaluable information on the makings of your raw materials and services.
Why it’s vital
As we embrace globalization and source lower-cost alternatives, whilst seeking to remain competitive, we expose ourselves to increased risks and uncertainties. The more intricate the supply chain, the more opportunities abound for time-critical networks to experience disruptions of all sorts.
The World Economic Forum’s Global Risks Report 2019 notes extreme weather events, natural disasters, and geopolitics as the top threats for 2019. According to John Drzik, President of Global Risk and Digital, Marsh, “the most striking aspect of this year’s report is the level of concern about geopolitical issues. Of the top ten risks expected to deteriorate in 2019, seven are connected to the political environment.”
Allianz’ Global Claims Review analyzed 470,000+ claims from over 200 countries and territories and lists the top causes of loss (by the total value of claims) for 2013-2018 as fire/explosion, aviation collision/crash, and faulty workmanship/maintenance. “In the past five years, fire and explosion incidents have been responsible for over €14bn worth of insurance losses from over 9,500 claims. These incidences are also responsible for more than half (11) of the 20 largest non-natural catastrophic events analyzed.”
Of course, supply chain risks don’t only stem from acts of God or politicians alone. Extreme weather, natural disasters, epidemics, and politics aside, there are inherent risks that arise from market dynamics, manufacturing processes, and logistics that complicate matters further. Oversold markets, yearly plant turnarounds, and union strikes are but a few examples of the issues that plague supply chains.
It is pertinent to note that the power of supply chain mapping doesn’t solely lie in disruption mitigation but also in identifying areas for cost, efficiency, or quality improvements and ensuring regulatory compliance. In today’s highly competitive market, it can be your differentiator.
Although supply chain mapping was once a cumbersome, resource-heavy process that provided little more than a high-level time-stamped view, today, we’re afforded a more holistic viewpoint and highly responsive solutions.
UPS Customer Solutions now offers a supply chain mapping service, “Supply chain mapping is the first step in creating an “outcome-driven supply chain.” The process identifies the change that will differentiate an organization from its competition, serve a client base with a prosperous value proposition, reduce internal cost, and drive profitability.”
The rise of Web 2.0, GPS, online maps, and social networking have transformed how we map our supply chains. Methodologies such as IDEF0 and SCOR have all but given way to cloud-based solutions. Today’s offerings allow for large scale collaboration, verification of geographical location, and synchronization of real-time data such as combining inventory data with emergency warnings and GPS locations of in-transit material.
As the effects of the coronavirus begin to infiltrate our supply chains, and tariff wars continue to play games with our imports, the need for contingency planning has never been greater. Yet, supply chain mapping continues to be an underplayed, high-value tactic, that changes your play from reactive to proactive, and may just be the move that wins you the game.