Managing risk is likely to be the top topic among supply chain professionals for the foreseeable future, and manufacturers should be shaping network designs based on when, not if, disruptions might occur, using new software to help them.
That’s the view of Fraser Ironside, global business development director of software developer and consultancy Barloworld Optimus. He believes his views have been “soundly confirmed” at recent events, where some of the world’s biggest commercial names have been asked what they feared most.
“Supplier failure emerged as the supply chain professionals’ greatest fear, with corporations most vulnerable to the knock-on effects of natural disasters and the geo-political state of the world,” he warns. “Almost half the delegates … pinpointed China as the region posing the greatest degree of risk – accounting for more supply chain jitters than Eastern Europe and India combined.”
Ironside points out that the only way to counter supply chain risk is in having a resilient and responsive supply chain underpinned by an effective risk management strategy. “Globalisation and expansion into low-cost countries have made supply chains inherently unstable for a number of reasons, and most are characterised by great distance, poor visibility and increasingly complex communication issues, with time-zone differences, language barriers, longer lead-times, and shorter product life-cycles.”
Software, he says, holds the key. “Companies employing early warning and detection systems will win through, because they will be the first to recover from any disruption.” And he urges supply chain professionals to look at Barloworld Optimus’ major new tool, CINO (combined inventory and network optimisation), currently “poised for release”, following several months’ proving trials in South Africa and the UK.
CINO, he says, combines complex route-to-market roadmaps with cost/risk trade-offs associated with potential sourcing, replenishment and inventory solutions at both strategic and tactical levels. It’s a development of the firm’s CAST and Optimiza software tools, and also allows users to gauge the impacts of decisions and future events on supply chains.
“Risk and its management is the next big thing in network design, for the simple reason that ours has become a world characterised by infinite variability in place of stability and order Scenario modelling – in short, predicting the results of any potential disruption whether geo-politic, natural or man-made – is the first line of defence” says Ironside.
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