Richard Vanderfor of The Wall Street Journal reports that myriad issues stressing supply chains are raising tough questions for businesses over the costs and benefits of managing risk and fortifying supply chain resilience. An artificial-intelligence powered tool to probe supply chains is showing promise. Vanderfor writes:
Supply chains that underpin the economy are facing ongoing stress from geopolitical tension, labor disruption and natural disasters. Some companies say they’re gaining an edge in their markets with tools aimed at managing the risks, but it doesn’t come cheap or easy.
A new generation of strategies and technologies to manage risk is growing as the strains in supply chains persist following the upheaval during the Covid-19 pandemic that left many companies scrambling to plug gaps simply to remain in business. […]
The pandemic punished companies that had prioritized lean inventories above all else, but the years since have seen a series of events that pushed companies to take a longer-term approach to managing risk.
A recent strike by dockworkers at a swath of U.S. ports raised the stakes for many American importers and exporters. Hurricane Helene, which pummeled the Southeast U.S. in September, disrupted businesses well outside the storm zone, including in auto plants in Texas and Michigan, according to an analysis from Everstream. The conflict in the Middle East over Gaza has also upended oceangoing transport. […]
Businesses that have invested in supply chain resilience saw revenue grow an average of 23% from 2018 to 2023, compared with 15% growth experienced by their peers, according to a survey by consulting firm Oliver Wyman. The same research shows only a third of companies are ahead of their own targets for supply-chain resilience. […]
Quantifind, a company that offers an artificial-intelligence powered tool to probe supply chains, has seen both public sector and private-sector interest, said Chief Executive Ari Tuchman. Many companies are drawn to the product by government mandates that, for example, demand they eliminate goods linked to forced labor from their supply chains.
“There is no right answer for every single risk,” said James Crask, managing director of strategic risk consulting for Marsh, an insurance brokerage and risk advisory firm. “But in the past, we’ve got that balance wrong. Most organizations have spent too much time driving costs out of the supply chain and going for more and more efficiency. The consequence being that in a world that is more uncertain, you are less protected from disruption.”
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