PERSPECTIVE: Building an agile supply chain

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The past two years have provided hard lessons about the pitfalls of globalization and its impact on the exchange of goods and materials across borders. Unprecedented events – the pandemic, blocked ports and geopolitical events around the world – have pushed supply chains to breaking point.

In February, the New York Times reported that a return to supply chain normality is “unlikely” in 2022. In March, the Harvard Business Review published a provocative article on supply chain issues: “The Risks of global sourcing beginning to outweigh the rewards? The World Trade Organization predicts that Russia’s invasion of Ukraine could nearly halve global trade growth this year, mainly by disrupting supply chains linking the two countries to the rest of Europe. and to the world in general.

To further illustrate how this unique event is having ripple effects around the world, economic and analytical experts at Dun & Bradstreet have published a report on the Russia-Ukraine crisis, highlighting the vast commodity flows to which these two countries contribute. , including 59% of world exports of sunflower oil. , 36% of world iron or non-alloy steel exports and 26% of world wheat exports. Beyond exports, data from Dun & Bradstreet demonstrates the interconnected nature of global trade where the crisis can impact business activity. For example, Russian entities have thousands of first-level supply chain relationships and millions of second-level connections.

There is no doubt that private sector companies and government agencies – civilian, defense and intelligence – have been affected by the deluge of unexpected and unprecedented events. Constant disruption is our new normal, and that’s why the administration recently released its Freight logistics optimization work (FLOW) initiative with an update on “tackle supply chain vulnerabilities and congestion, work to speed up the movement of goods and reduce costs for families. FLOW goes on to say that “we can further strengthen our freight transportation supply chains by making an equally bold improvement to a digital infrastructure to connect the supply chain.” How can agencies help move this initiative forward?

A call for advanced technology and analytics to manage risk

The emergence of COVID-19 two years ago was the first wake-up call for procurement and supply chain managers as they clamored to find new suppliers around the world who could supply equipment. personal protective equipment (PPE) and other medical resources. While the crisis of the moment often impedes planning for the future, it is important that agencies act now to safeguard our country’s future supply chain.

In order to avoid the worst consequences of supply chain disruptions, it is essential that agencies leverage data-driven risk management solutions with advanced technologies such as machine learning and artificial intelligence to predict supply chain issues before they arise.

The power is in the data

For starters, agencies should consider using a technology platform that leverages global data, updates regularly, and adheres to privacy regulations. And when reviewing data sources, it’s important to use a combination of trusted first- and third-party data to uncover insights into the financial health, relationships, and hierarchies of potential vendors. This will help an agency better understand an organization’s business activity and its links to other organizations around the world, before engaging with them. Analytical information can also shed light on whether an organization has been involved in fraudulent activity or should be avoided – a key piece of information today as agencies question their vulnerability to foreign influence and potential threats to government resources and programs.

Creating an agile supply chain starts with knowing all levels of suppliers

Disruption is inevitable, so it’s important for agencies to better understand and build strong relationships with a geographically diverse set of vendors at all levels. With solid data and in-depth analysis, it’s possible to get a pretty good idea of ​​where supply chain issues are likely to emerge – and to have a head start in mitigating those. risks. In fact, validating and onboarding alternative suppliers is critical to the success of a more agile long-term management strategy, as supply chain managers can monitor supplier activity in real time to identify potential risks such as port closures or natural disasters, then pivot at any time to suppliers in less impacted regions.

Mitigate risk by staying ahead of the problem

The goal is to stay ahead of potential problems by spotting them on the horizon – before it’s too late. Data is part of the solution, but it is not the panacea. Without analysis, data is of little value. Digital information makes sense when an agency has the ability to connect the dots and form a cohesive picture of emerging risks. When advanced technologies and analytical insights work well, data flows and distills into what amounts to a flashing warning sign, a do-not-miss beacon that draws attention when something is wrong, allowing agencies to make more informed strategic decisions.

While we can’t predict the next big disruption, we can ensure that our supply chains are strong and resilient enough to pivot and withstand any unexpected events in the future.

The opinions expressed here are those of the author and are not necessarily endorsed by Homeland Security Today, which welcomes a wide range of views in support of securing our homeland. To submit an article for review, email [email protected]

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