Organizations need to be aware of where there are vulnerabilities in their supply chains that create risk and how they can manage or reduce risk wherever possible.
The elements of supply chain confidence are visibility and control, the lack of which will increase supply chain risk.
“Visibility” refers to the ability of all members of a chain to see from one end of the pipeline to another; an undistorted view not clouded by intermediate inventories or other barriers to vision. Lack of visibility forces supply chain members to rely on forecasts and to build buffers, worsening the situation.
Unfortunately today most supply chain members do not have detailed knowledge of what is happening in the rest of the chain. For example, they usually lack information on finished goods inventory, material inventory, work-in-process, demand levels, production plans, capacity, yields and order status.
Supply chain control refers to the ability to respond to disturbances in appropriate ways. Problems arise when disturbances are not recognized in time and when there is a time lag for the remedial action to take effect. This can result in the remedial action actually worsening the situation.
The factors identified above are present, to a greater or lesser extent, in most supply chains today. For this reason it is apparent that organizations need to be aware of where there are vulnerabilities in their supply chains that create risk and how they can manage or reduce risk wherever possible.
