We’ve never been strangers to disruption in the supply chain, but lately, we keep getting hit with ones we just didn’t expect. In some cases, cascading disruptions like the winter storm in Texas caused utilities to fail, knocking out critical upstream capacity in petrochemicals and semiconductors. This failure, in turn, is still wreaking havoc on a much wider swath of downstream industries reliant on ready supply of those critical ingredients. In others, it’s the proverbial 100-year event that now seems to arrive every few years. #2020
What Might Come Next?
Later this spring, the Gartner Supply Chain Research team will publish the results of a study showing some supply chains as more successful at minimising exposure to all manner of disruptions. These organisations think differently about designing in mitigating characteristics and capabilities compared to most traditional supply chains. Perhaps this is the best we can do — shore up the castle walls and hope they weather whatever storm comes next.
On the other hand, we are planners in the supply chain. There’s got to be a way to bring some of these unexpected risks onto our registers, right? Maybe we just need to channel our inner Debbie Downer and open our minds to the possibilities. In this spirit, here are a few disruptors lurking right at the edge of our day-to-day.
A Massive Cyber Attack
The secret, unwanted code may already be sitting on your company’s servers, lying in wait for the trigger date or event. Imagine an attack that shuts down not only your own systems (email, ERP, partner portals, etc.) but at the same time those of some of your customers, suppliers, and strategic partners. Cyberattacks are the modern-day version of a Cold War strike. As tensions between East and West escalate, the probability of an attack making it past the firewall will only increase. In some cases, perpetrators’ motives may be purely financial or anarchistic in nature, but the net result is the same. In total, the financial impact of cybercrime is expected to reach $US10.5 trillion by 2025. To put this in perspective, a country of that size would run the third-largest economy in the world.
Cyber disruption is no longer a “black swan” risk, it’s more like a seagull, loaded and ready to strike.
A Silver Exodus
The US Bureau of Labor Statistics recently noted that more adults age 65 and older left the labour market in 2020 than in any year since it started tracking in 1948. Health and safety concerns were certainly a factor, though it’s expected that many won’t return post-pandemic. Moreover, for those still in the workforce, there is a gathering force that may lead to another wave of exits.
In 2020, governments in most major economies piled on enormous fiscal stimulus and their central banks concurrently created the most accommodative monetary environment since the 2008 financial crisis. A lot of this money has found its way into investment markets, boosting global stock indexes to all-time highs.
Why include this “good news” story in a list of disruptive threats? There is a wave of Baby Boomers on the cusp of retirement. Strong returns in near-term equity markets could accelerate the exit of a large cohort of today’s workforce that contains the wisdom, culture and steady hands currently guiding our supply chains. Unless we take a proactive approach to institutionalise and pass on this expertise, through mentoring and the use of knowledge management systems, we may find ourselves suddenly underpowered in the face of today’s more disruptive environment.
Frequent earthquakes, stifling droughts, and “sovereignty risk.” If the high-tech industry were designing its supply network, greenfield, it would probably choose not to place the largest global share of semiconductor production on the powder keg that is Taiwan. TSMC, the world’s dominant chip foundry manufacturer, recently announced that it would open a large wafer fabrication plant in Arizona. Intel recently announced that it, too, would invest billions of dollars in semiconductor manufacturing capacity in the US and Europe. These moves point to industry recognition of the risk concentration. Multibillion-dollar semiconductor plants take years to build, however. In the meantime, the world will be holding its breath hoping its Taiwan bet doesn’t come up snake eyes.
With the right subject matter experts, any supply chain organisation can take another, more refined look at the risk horizon. Just as important will be a mindset recognising that the number of risks within the realm of higher probability has increased, including those cascading from upstream sources. Sounds daunting? If this job were easy, anyone could do it.
This article is republished with permission by Gartner