A Tough Year for Supply Chain Risk

May 28, 2009
AMR Research says 2008-2009 is as bad as it gets

Kevin O'Marah, of AMR Research, reports that his company's newest quarterly risk survey data "shows a quantum leap in maturity among global supply chain professionals who have enjoyed the ultimate real-world crash course in risk assessment and mitigation. The bottom line: Disaster is real and pervasive, but deeper collaboration plus smarter modeling make a big difference."

At the top of worry list is supply failure with commodity price volatility down slightly from a year ago, "indicating that supply chain people dont necessarily like low commodity prices any more than high prices -- they just want stability."

Product quality failures, both internal and from suppliers, are well up over the year, reflecting the challenge of ever-longer and more complex supply networks, O'Marah notes.

"Risks that have seen a decline in importance are the ones that first come to mind for the layman. Natural disaster is at the very bottom of the 15 risks we studied, and it's in decline. For anyone watching the news, this might seem counterintuitive, but in practice, supply chain resilience is actually one of the reasons recent disasters have meant less business disruption than one might imagine. Case in point was the Chengdu earthquake, which killed some 80,000 people, but it did little to slow the flow of goods from China to world markets. Another was Hurricane Katrina, which was an epic failure for FEMA, but a showcase of logistics excellence for supply chain people from Procter & Gamble, Home Depot, and others.

"Immature physical infrastructure is another risk down for the year. This problem is steadily receding, however, as developing markets upgrade their roads, ports and communication networks."

To read the full article visit http://www.amrresearch.com/Content/View.aspx?compURI=tcm:7-43399

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