Organizations have depended on worldwide, integrated supply chains to improve profitability for more than a generation. The worth of transitional goods traded worldwide has tripled to more than $10 trillion since 2000. During the same time period, a supply-chain prognostic indicators such as inventory levels, on-time-in-full deliveries, and lead times were enhanced for businesses that were successful in creating lean, global networks.
These efficiency gains, however, have not come cheap. From climatic changes and the rise of a multilateral economic system to greater mobility and digitization, an ever-expanding set of global problems has increased the surface area and amplitude of supply-chain risks.
Supply chain risk and resilience
A risk-aware culture is required to assist an organisation in establishing and maintaining strong defensive layers against unknown risks, as well as responding more immediately in the event of a serious crisis or implementation threat. As COVID19 revealed vulnerabilities in companies’ supply chains, resiliency requires not only awareness, but also setting an intent across the organisation, communicating effectively to the entire staff, and taking tangible action to address both immediate and long-term risks.
Leaders must clearly establish and document the risk tolerance of their organisation. Risk mitigation frequently comes at an incremental cost, so it is critical to agree on which risks must be mitigated and which can be borne by the organisation.
The ideal organisational culture also allows for the open sharing of warning signs of both internal and external risks. Management and staff must feel empowered to share bad news and lessons learned on how to correct course.
This openness creates an environment in which people understand that they can raise concerns and have them addressed.
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