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These 4 Issues Pose a Big Risk to Your Supply Chain

Supply Chain and Logistics

Posted on 05-25-2017 by Lucia Garza

Reading Time: 5 minutes

Supply chain threats.

It’s often said that those who spend all their time worrying have no time left to enjoy the present. While that may be true, it’s also the case that those who spend no time attempting to anticipate threats (and developing contingencies for those more likely to occur) leave themselves open to substantial risk when things go south. With this in mind, it’s worth recounting some of the potential threats to your supply chain.

1. Severe Weather

Severe and extreme weather events already weigh heavily on the minds of most shippers. Their effects are tangible and visceral:

  • trucks overturned by straight-line winds;
  • warehouses ransacked by tornadoes;
  • transport networks snarled by snowstorms;
  • ocean vessels waylaid by storm-churned seas;
  • and worse

This doesn’t mean all shippers are prepared, however. According to the Harvard Business Review [1], younger companies are particularly vulnerable to weather disruption due to inadequate property insurance, unfamiliarity with the byzantine process of applying for public assistance, and poor or constrained credit (which often hampers recovery).

Though no weather mitigation strategy is foolproof, companies can limit disruption and damage by:

  • Maintaining adequate stocks of supplies to ride out turbulence
  • Purchasing futures contracts to insulate against weather-related price volatility
  • Partner with third-party logistics firms with multimodal capabilities and ample geographic diversity

2. Widespread or Localized Power Failures in Supply Chain Technology

In an increasingly automated logistics environment, even a temporary power failure poses a clear and present danger to any supply chain. Inventory management systems, dispatch systems, local and long-distance communications networks, and customer-facing platforms (such as e-commerce portals) – to name just a few – depend on uninterrupted power supplies.

Protect against preventable interruptions by investing in regular equipment and infrastructure maintenance and repair

Power interruptions due to weather events, natural disasters, fires, degraded infrastructure, or even localized issues (such as a blown breaker at your facility) can affect your entire supply chain. However, you can protect against preventable interruptions by investing in regular equipment and infrastructure maintenance and repair at your facility. To mitigate the damage from widespread outages that you can’t correctly control, invest in redundant power systems, such as diesel generators and solar arrays, at critical points in your supply chain.

3. Cold and Flu Season

Cold and flu season is an annual ordeal, and it may be doing more harm than you realize to your supply chain: according to the CDC [2], influenza alone is responsible for 111 million missed workdays and $7 billion in lost productivity each year.

In a just-in-time logistics environment, every missed workday is a threat. When someone on your team misses a day of work, someone else needs to step up, which often necessitates overtime pay. Extended absences may require temporary hires or longer hours for remaining workers, especially if multiple workers are sick at once. That’s bad for morale, your delivery timetables, your ability to add new capacity or handle new demand, and, most importantly, your bottom line.

4. Cyber Threats

Cybersecurity threats are scary in part because they seem so random. Anyone can be hacked – though, in practice, the most destructive breaches affect the highest-value targets, like major corporations. Target, Home Depot, and Yahoo all have been victimized by massive hacks that endangered sensitive data from tens or hundreds of millions of customers. These unfortunate events reverberate up and down the supply chain, and they’re virtually guaranteed to put a short- or long-term damper on your business prospects.

To prevent against unwanted digital disruption, compartmentalize and secure your most sensitive data (customer payment information, proprietary materials, employee records) using the most stringent practices possible. Additionally, hold your vendors and suppliers to the same exacting standards: once hackers breach one node in your supply chain, they can very often move through it at will.