Risk Mitigation: Supply Chain Safety Net

Risk mitigation

Meeting demand without over-investing in safety stock can be a real balancing act. Risk mitigation strategies protect shippers from landing hard when supply chain disruptions occur.

In a near-perfect world, supply and demand would wobble and waver, then—in harmony with historical context and predictive hedging—find some semblance of balance. But when an unforeseen force topples formalities, there’s no quick fix for chaos.

Consider the litany of natural disasters that have sent shockwaves through supply chains over the past few years: Iceland’s Eyjafjallajökull volcano eruption in 2010; the earthquake and tsunami that struck Japan in March 2011; severe floods in Thailand that followed four months later; and Hurricane Sandy in the United States in October 2012. Then add the social and economic dis-ease spread by financial contagions—draconian realities that still resonate in many parts of the world.

Global supply chains are fraught with risk. Supply and production lines span continents, and are pulled so taut through continuous optimization that any blip of the radar threatens to snap routine, and cause disruptions. That’s the cost of doing business.

All it takes is one glitch in a complex, demand-sensitive supply network to completely halt production. There’s no surefire way to safeguard supply chains from these types of exceptions.

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