Institute for Collaborative Working
The last two decades of the 20th century saw major changes in the business world, perhaps more so than ever before. Pressures on costs, diminishing traditional markets, the explosion in information technology add complex influences on the potential success of business strategies. This is combined with perhaps the most crucial of all – the dramatic growth in globalisation. These trends continue into the 21st century and will likely remain key factors for the future. Over the same period we have witnessed major changes to weather patterns and their impacts, increased political unrest, escalation of cyber crime and fraud on unprecedented scales and networked terrorism introducing wide ranging threats. Not to mention the implications of financial interdependence as seen through the banking crisis and its impacts on sovereign currency stability and contagion.
Ensuring the resilience of the supply chain, whilst harnessing the benefits of greater external engagement means that management of sustainable arrangements and their inherent risks must be integrated into operating practices. Sourcing strategies now have to balance the more historical parameters of completion with a greater understanding of the associated risks. The extended supply chain has now become an integral aspect of many businesses, but perhaps less focus is being given to the potential of third party risk flash back. The impact of the Tsunami on Japan’s nuclear industry highlights the potential reverse domino effect, as did the backlash from Rana Plaza.
Clearly the key to supply chain resilience and for that matter business continuity is clarity of potential impacts and risks. Seeking to simply have visibility or contractual commitments around these issues is likely to leave some aspects to assumptions which are perhaps even bigger risks. Developing the right kind of collaborative relationship with suppliers not only will help to broaden the perspective of risk but in many cases will, through greater openness, likely bring about wider and more effective solutions. Not only increasing openness but also building trust and commitment to jointly work together when challenges arise.
David will be discussing this and the issue of supply chain resilience within the 'Thought Leadership' stream at the BCM World Conference on Wednesday 6th November, starting at 15:20.
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