- 30 March 2023
New challenges to the supply chain are emerging all the time, largely due to geopolitical unrest and the climate crisis (and no, we’re not going to mention the pandemic). Thorough due diligence, based on automation and reliable data, combined with ongoing third-party risk management (TPRM) remains the best way to ensure the supply chain is fit for purpose.
Recently we looked at the thorny issue of sanctions when it comes to the supply chain and TPRM, but there are other possible traps for the unwary. Here’s just three examples from recent history:
- Obsolescence: The world’s supply of floppy disks is finally running out. The removal of one more plastic item from the supply chain should be welcomed, though it does leave organisations that still rely on them in a bit of a bind. There is a cargo airline in Georgia, for example, that’s flying two of the last operational Boeing 747-200 aircraft. The planes have their critical updates applied via – you guessed it – floppy disk. There is a lesson here for anyone tempted to avoid spending money on updating older tech, even as it becomes increasingly difficult to find the parts that keep it functioning.
- Ship slip-ups: In March 2021, the container ship Ever Given spent six days stuck across the Suez Canal, holding up an estimated US$6.9bn worth of trade. The snarl-up was used to bolster the argument that the US should be doing more trade with physically closer markets in Latin America (“friendshoring”). Does your TPRM take account of what would happen if one of your crucial suppliers didn’t deliver? Have you got a mitigation or back-up strategy?
- Weather woes: The growing regularity of events like flooding, droughts, heatwaves, and cold snaps will all hit the production of various foodstuffs, but they’ll also make transportation less reliable and power cuts more frequent. Where do you source your materials from? Could you get them closer to home, or look at substituting them?
If that’s not feasible, you may have to follow the lead of UK wine producer Nyetimber. In 2012 adverse weather conditions affected the quality of its grape harvest. However, rather than source grapes from elsewhere Nyetimber decided to risk skipping a 2012 vintage altogether. It used the resulting press coverage as a PR opportunity to highlight its commitment to quality.
How we can help
At Thomas Murray, we have 30 years’ experience of working in the world’s most complex sectors to strengthen their due diligence and TPRM. Orbit Diligence is the scalable, comprehensive solution we created to meet those needs. Talk to us to find out how Orbit Diligence can protect your organisation in a fast-changing risk environment, and help you to strengthen your supply chain.