Sourcing Innovation – Friday, May 10, 2013 – Us! The biggest supply chain risks are not bankruptcy and plant failure, they are not unusual and damaging weather patterns, and they are not natural disasters. As clearly pointed out in the Supply Chain Risk Leadership Council (SCRLC) in their 2013 Emerging Risks in the Supply Chain study, the biggest risk is us — the human race — as a collective whole.

To see this, let’s review the fourteen (14) risks that were identified and discussed.

    o

  • Climate Change

A key contributor to climate change is the amount of carbon emissions we are producing. We keep burning oil, coal, and natural gas, and we keep doing so without any significant attempt to trap and sequester the carbon back in the ground it came from, allowing it to creep back into the atmosphere and increase the carbon dioxide percentage.

    o

  • Global Supply Chains

We keep outsourcing and offshoring even though, in May 2012, the total industrial capacity utilization in the U.S. was a mere 76.3%. To put that in perspective, one in every four plants is sitting idle at any one time.

    o

  • Increasing Social Inequity

Less than 1% of households control 40% of the world’s total financial wealth, with inequality ranging from their 34.5% share in the U.S. to their 70% share in China. And we don’t seem to be doing much about it, especially given the number of tax shelters available to the extremely wealthy in much of the developed world.

    o

  • Gender Imbalance

The one-child policy in China and the cultural history of favouring boys over girls in India has led to the situation where, in the next decade, there will be significantly more men of working, and marrying, age than women. People, trying to fix one problem, created this problem instead.

    o

  • Population Increase

Statistically speaking, we are expecting a population increase of almost 30% by 2050 where we expect the earth’s population to be 9 Billion people! We’re all contributing to this.

    o

  • Population Migration

It was only six years ago that the urban population exceeded the rural population. By 2050, we will have 70% of people living in urban areas. We are creating the mega-cities which, instead of being a sustainability boon, are, in many cases, an environmental nightmare.

    o

  • Global Democratization

What is likely to happen is that instead of replacing years of corruption, political repression, and economic disparity with stable democracies we are going to end up with the chaos and disorganization that could arise from new political systems being established by individuals with little governing experience.

    o

  • Dependence on Information Technology

We have come to rely on information technology to the point that when the software fails, we are immobilized. We allowed ourselves to become too reliant on technology.

    o

  • Government Financial Crises

Governments, run by politicians that we elect and allow to stay in office, around the world have taken on too much debt.

    o

  • Government Social Policies

In many countries, the majority view is that social policies are not properly funded, not equitably applied, and not equitable with those of whatever nation is currently being looked upon as the best role model for social governance. But we elected the government that created and maintains them.

    o

  • Global Economic System Disruptions

We created the rules that govern the financial systems that are starting to break down.

    o

  • Social Media Threats

Social engineering, anti-brand campaigns, and other socially-based attacks are all people-driven, not technology driven.

    o

  • Global Mega Cities

All over the world, we keep building mega cities and keep moving into them, creating extreme levels of congestion and infrastructure problems.

    o

  • Aging Population

Thanks in part to the baby boomers, we are getting older as a population. The number of people over 60 is growing at a rate that is 2.5 times the population growth rate.

In other words, directly or indirectly, people are the cause of the majority of supply chain risks, and that’s why supply chain visibility and third party management, focusing on the management of people, is so important.

(And while we’re all to blame, as hinted at in the study, the 1% deserve at least 34.5% of the blame! Their unequal tax treatment is a big reason we’re so deeply in debt and can’t adequately support social programs. Statistical models have demonstrated that their campaign contributions play a significant part in who gets elected and forms the governments that control our social, economic, and trade policies. They are collectively the biggest social inequality. And they could do the most towards moving us to sustainable energy models.)

Source: Sourcing Innovation – What’s the Biggest supply Chain Risk?