March 2018
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Supplier Risk and the PIGS

The waste squeezed out of supply chains over the past twenty years has increased efficiency, but it may have also increased supply chain risk

Whether or not your firm has any direct connection to Portugal, Italy, Greece, or Spain, uncovering your resulting risk exposure may matter more than you think. Your suppliers may have suppliers in these countries – or, perhaps more dangerously, customers. 

Few companies have analyzed their supply chain risk with the same zeal that they have optimized efficiency. The reasons are many. Globalized supply chains have brought not only saving, but often wider choice. New IT tools have enabled precise tracking and logistics have enabled “just-in-time” across nearly every industry.

The resulting disappearing slack has removed much of ability to absorb shocks in supply chains. A sudden jolt of energy can snap a tight line, where a slack line would barely register the force. This difference requires vigilance.

Avoiding risk often depends on recognizing the warning signs: 

  • What is your exposure to Portugal, Italy, Ireland, Greece, and Spain?
  • How exposed are your suppliers?

 How will you know trouble is brewing? 

  • What warning can you expect from them if trouble is brewing?
  • What signs can you might you see before trouble breaks out?

 What if your supplier cannot deliver?

  • How much will be owed by whom and to whom, if deliveries are interrupted?
  • How will the question of payment be resolved?

 What will you do if your supplier cannot deliver? 

  • Are there other providers?
  • Do they have the capacity you need? 
  • How long would it take them to deliver?
  • What would it take for them to deliver?
  • How would your processes have to change?
  • How would your products have to change?
  • How long can your customers postpone delivery?

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