Supply chain vulnerability: developments, trends and impacts | by Ozias Ncube

OziasncubeSupply chain design has assumed significant importance recently because of demonstrated instances of the vulnerability of supply chains. Complex supply chains are particularly susceptible to various disruptions. Although some disruptions occur infrequently, it is imperative that their profile be examined, so as to understand the extent of impact on supply chain performance, with at-times disastrous consequences for the different supply chain players.

This article will attempt to present a brief insight on latest developments on supply chain vulnerability and dominant vulnerabilities trends, and provide some suggestions on how to profile disruptions that may cause realisation of these vulnerabilities.

Developments and trends

Complexity in supply chain arises depending on a number of elements. Broadly speaking, here are some of the most likely reasons:
  1. Global supply chains – implying either global supply, global distribution networks and or global markets. This creates multiple points of contact within the chain, with particular “ at risk” view to logistical challenges, cultural changes, global financial systems and appropriate legal and legislative frameworks applicable to manage supply chain relations.
  2. Technology – in particular the desire for integration and collaboration. However, the extent of development and adoption of technology and appropriate management systems to complement the integration objective is rarely homogenous throughout the chain. There are pockets of excellency and some players are always lagging behind. This disturbs information flow, affects supply chain visibility.
  3. Innovation – in particular with respect to adoption of cloud enabled capabilities, utilisation of drone and related technology of the fourth industrial revolution (4IR) Era, for example. However, these tend to draw labor force resistance as sub-Saharan Africa, as “developmental states” lean more towards labor-intensive supply chain operations.
  4. Knowledge and skills gap – with a significant number of multi-national entities’ supply chain headed by either non-nationals and or non-Africans, this appears to be a huge exposure with many of the sub-Saharan Governments displaying nationalistic tendencies and not renewing expatriates permits beyond the initial three to five-year periods.

It is clear that the first issue above is unavoidable. This is a growing trend in supply chain as organisations seek cheaper supplies and growing markets. The focus may be about streamlining and reorienting the supply chain to be lean and responsive.

The second and third issues above present both opportunities and huge vulnerabilities. With regards to opportunities, 4IR creates space and platforms to leapfrog forward by modernising use of supply chain resources while effectively dealing with stakeholder concerns around sustainability – societal and environmental impacts. Cloud-enabled technologies provide wider capability, and maximises opportunities for supply chain visibility.

However, while the benefits are clear, it is the corresponding cyber-security scare that is of much concern, hence the classification as a vulnerability. Lately, we’ve seen a marked increase on cyber security attacks in the supply chains, mostly focused on changing contractual terms, hijacking and rerouting of delivery, changing of product characteristics and flagrant flouting of customs and excise duty procedures. There have been instances where supply chain entities are locked-out of their systems, with the criminals demanding a ransom payments before access is granted. This definitely requires a closer look and appropriate mitigation be determined.
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With regards to the knowledge and skills gap, I believe knowledge transfer mechanisms must be formalised, and personal development plans for the identified key personnel put in place for accelerated development – in alignment with your country’s skills development legislation. Liaising with supply chain professional bodies, accredited training service providers, and recognised education programmes does provide an out-of-company solution that is credible.

Impacts and managerial considerations
It is important to identify what may initiate these vulnerabilities, so as to put measures in place for mitigation to ensure resilience. There are many different tools and methodologies. For this discussion, I have chosen to discuss a methodology derived from H. Peck (Resilience Centre, Department of Defence Management and Security Analysis, Cranfield University). The approach views vulnerability and resilience from four-parameter perspective: (i) risk sources; (ii) consequences of risk sources; (iii) risk drivers that turn risks into consequences; (iv) strategies that address the risks.

It is important to be able to identify and characterise the disruptions to which we are vulnerable. Your mitigation steps may be grouped as follows: (a) information related policies; (b) buffer related policies; (c) alternate sourcing policy, and (d) component substitution. The suitability of the approach will be influenced by the supply chain’s realities. Whichever approach is chosen, it should further be assessed in terms of lead time, costs, quality, and flexibility. Natually, organisations can add other indicators over and above these baseline four. In my opinion, if this process can be robustly tackled, then it is safe to say the organisation has sufficient capability to cope with vulnerability and ensure resiliency.

Ozias Ncube is a senior lecturer in supply chain management at the Graduate School of Business Leadership (SBL), University of South Africa (UNISA) - www.bespoke.co.za
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Posted on October 08, 2018