Managing disruption in 2022 and beyond will require robust oversight and a more holistic understanding of the supply chain itself – including looking beyond traditional partners, methods and technologies.
Oscar Wilde famously said: “There is only one thing in life worse than being talked about, and that is not being talked about.” Considering the past 12 months, the global supply chain has nothing to worry about on that score.
The global supply chain crisis has been the topic of discussion in board rooms and across kitchen tables. Few have ever experienced supply chain issues to this magnitude, and many are questioning just how long they will go on. In an effort to alleviate some of the current supply chain challenges, the U.S. Department of Transportation announced it will be allowing port authorities across the country to redirect project cost savings toward tackling supply chain challenges.
Although this effort may serve as a speck of hope, organizations need to be proactive now and develop a plan of action to confront supply chain challenges. Organizations must understand that the onus is now on them to ensure that suppliers are managing their business relationships correctly. It’s time to adopt a holistic approach and look beyond traditional supply chain partners, methods and technologies.
Identifying Pain Points in the Supply Chain
As a crucial first step, organizations need to understand the dynamics of the supply chain to identify where the common pain points are and put robust control measures in place. According to BSI’s 2021 Supply Chain Risk Insights Report, one common pain point for most organizations amid the pandemic has been highly inflated shipping costs from east to west. In some cases, costs are as much as 650 percent higher than pre-pandemic rates, completely upending global business models. Overall, identifying pain points in the supply chain like this can enable organizations to develop a more fitting strategy to address current challenges.
The second step is to establish effective communication between all parties to gather timely information throughout the supply chain: “Where’s the product?” “How is it being transported?” “What are the temperature control elements?” Having answers to questions available on demand helps keep a supply chain up and running without fear of an unknown threat.
Third, it’s essential to establish common goals, objectives and strategies across the organization so that the entire business is fully integrated in a unified approach. This convergence of values requires a common understanding of what the organization is trying to achieve, the standards it’s trying to uphold and the key reporting requirements of its stakeholders.
Understanding Your Suppliers
There are two things organizations need to ask when looking to better understand their suppliers:
- Will the supplier be a good business partner that is open to work together to identify, address and mitigate threats along the supply chain?
- Does the supplier want to grow with the organization as a good corporate citizen and help address the bigger issues the industry will be facing in 2022 and beyond?
Basic, surface-level questions – “Can you produce the goods?” “Can you do it for a competitive price?” “Can you do it on time?” – no longer cut it when vetting suppliers, as these should be accompanied with risk-assessment questions. It’s crucial to have the right data and intelligence in the initial stages of a new collaboration to make informed decisions about how to allocate resources. Organizations will also need to remember that a supplier relationship is always evolving, and by asking the right fundamental questions, they will be better positioned to see the whole picture and not just a snapshot in time.
Anticipate New Regulations
Amid all the uncertainty organizations and suppliers face daily, one thing we know for certain is that regulations will keep changing. Ideally, organizations would want to be one step ahead of any regulation coming down the pipeline, so they can put the appropriate measures in place before it becomes mandated. This is becoming evident with existing regulations such as the Modern Slavery Act in the UK and the anticipated environmental, social and governance (ESG) guidelines from the U.S. Securities and Exchange Commission (SEC).
New regulations affecting the supply chain are evolving and increasing in frequency, and it’s important to understand that there could be components of these regulations that impact crucial business decisions, especially when vetting suppliers as potential new regulations in environmental safety has been dominating the headlines. In response, organizations must constantly monitor for new and changing regulations and reexamine their partnerships with suppliers to ensure that they, too, are compliant.
Adapting to Multiple Challenges
There needs to be a clear understanding within an organization that business continuity, sustainability, corporate social responsibility (CSR) and info security teams need to work together on the same challenges.
Data and analysis have consistently shown that whatever the sector or geography, business continuity disruptions can lead to security issues. For instance, a labor strike can lead to goods piling up in overflow at warehouses, and it won’t be long before bad actors identify these weak points. As mentioned in the BSI report, this was proven to be true in the latter end of 2020 when political unrest swarmed the streets of Lagos and Abuja in Nigeria. Thousands of demonstrators took to the streets to protest the Special Anti-Robbery Squad (SARS) over human rights violations toward people suspected of crimes.
Parallel to this demonstration, cargo theft became more common and the violence of those incidents accelerated considerably. Criminals increasingly targeted the facility modality, often exploiting the weaker security environment. In this way, you can see how external factors can greatly affect where a supply chain needs additional protection.
Ultimately, there must be working groups within organizations that understand these overarching supply chain challenges and bring all the different experts together to resolve them with a convergence of corporate insights. The organizations that embrace this approach will be those that find the best solutions. Of course, this is much easier said than done, and no organization purposely creates silos, but leadership teams need to show the way by identifying and tackling these challenges head-on.
Looking Ahead to 2022 and Beyond
In short: Organizations need to be proactive and visionary, working to embrace change before it becomes imposed upon them — and using those changes to drive competitive advantages. When it comes to addressing key pain points, organizations need to first identify them, establish effective communication between all parties, and then embrace a unified approach.
Our current supply chain challenges may well stick around throughout 2022 and potentially even to the years beyond. For organizations to build more resilient supply chains in the long run, they must act now. With a measured approach, leaders can address their business and supply chain challenges and deliver better, faster results.
Jim Yarbrough is Global intelligence program manager at BSI. He leads BSI’s team of supply chain security analysts and assesses the potential threat of terrorism and cargo disruption to countries and businesses worldwide. Jim previously served as a research associate with the Center for International Trade & Security at the University of Georgia. There, he conducted on-site assessments and provided analysis on foreign export control and border security practices on behalf of the U.S. Department of State.
