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President Trump is Disrupting. Again.

By Steve Geary | 06/27/2018 | 7:18 AM

Everybody in logistics needs to pay attention when the President talks about tariffs. 

We are entering into an era of increasing uncertainty, and uncertainty breeds risk.  Are American businesses ready if the trade wars escalate?  On the flip side, are American businesses ready if tariffs shrink or or trade barriers disappear?  Many are not. 

Supply Chain Risk Management (SCRM) is "the implementation of strategies to manage both every day and exceptional risks along the supply chain based on continuous risk assessment with the objective of reducing vulnerability and ensuring continuity."

Parse that SCRM definition:  manage based on continuous risk assessment, reduce vulnerability, ensure continuity, and, by implication, execute within the operating budget.

Every logistics leader claims to do SCRM, but let’s get real.    Companies may know where their Tier 1 suppliers are, but what about the next level?  Over the past 25 years, the supply chains have become increasingly global.  This means that every business in America is exposed to global risk.

When a supply chain spans the globe, the risk profile for that supply chain shifts.  According to a study by Zurich Insurance several years ago, fully 30% of supply chain disruptions originate at Tier 2 suppliers.  Almost 10% came from a supplier in Tier 3 or even further down the supply chain.

Do you have contingency plans that extend to Tier 2 and Tier 3?  Does your organization know where they are?

Asked to quantify logistics performance, managers will talk about lead times, fill rates, freight costs, and obsolescence.  Yet, if Risk Management is a key element in logistics, SCRM measures should be at the top of the list, too. 

What about time to recover?  Facility risk indices?  Utilities resilience? 

President Trump, by bringing attention to government trade policy and tariffs is doing us a favor.  The potential for a trade war is a warning bell.  Step back and assess.

Then start paying attention to SCRM. 

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About Steve Geary

Steve Geary

Steve Geary is an adjunct faculty member at the University of Tennessee's College of Business Administration, and is on the faculty at The Gordon Institute at Tufts University, where he teaches supply chain management. He is the President of the Supply Chain Visions family of companies, and Chief Operating Officer at ROSE Solutions, consultancies that work across the government sector. Steve is a contributing editor at DC Velocity, and editor-at-large for CSCMP's Supply Chain Quarterly. He is listed in Who's Who in America, Who's Who in the World, Who's Who in Science and Engineering, and Who's Who in Executives and Professionals. In November of 2007, Steve was recognized for "Selfless Service to Our Nation and the People of Iraq" by the Deputy Secretary of Defense.



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