Effective Risk Management in Supply Chains

Because supply chain failures can bankrupt a company... This infographic shows 7 companies that filed for bankruptcy and the hard lessons: 👉 Revlon (2022); $2B Cosmetics manufacturer ❓ Why: intensified competition for ingredients, and vendors with 75-day payment terms demanding cash in advance for new orders ✅ Hard Lessons Learned: proactively manage supplier risks; diversify supplier base and maintain strong supplier relationships 👉 Party City (2023); $2.16B Party supplies and decorations retailer ❓ Why: global supply chain uncertainty, COVID-19 economic pressures, and the 2019 helium shortage ✅ Hard Lessons Learned: identify alternate sources or substitutes for critical materials; develop contingency plans for critical resource shortages 👉 Bed Bath & Beyond (2023); 5.34 B Home goods and furniture retailer ❓ Why: inability to adapt the company’s supply chain to e-commerce trends ✅ Hard Lessons Learned: align supply chain capabilities with changing consumer preferences; invest to support online and in-store demand shifts 👉 J.C. Penney (2020); $7.6B Department store for apparel, home ❓ Why: inability to adapt to e-commerce channel; excess inventory and markdowns, trapping cash flow ✅ Hard Lessons Learned: optimize inventory management; implement accurate demand forecasting and inventory optimization tools 👉 FoxMeyer Drug (1996); it was a pharmaceutical distributor, $5B in sales ❓ Why: failed ERP implementation disrupted its supply chain operations, leading to significant financial losses ✅ Hard Lessons Learned: effective planning, change management, and thorough testing are critical for successful ERP rollouts 👉 Sears (2018); once a leading American retailer with $53B in sales ❓ Why: Inability to adopt technology-driven supply chain solutions, leading to inefficiencies ✅ Hard Lessons Learned: leverage supply chain efficiency as a competitive advantage; continuous investment in logistics and technology 👉 Tupperware (2023); over $1B Iconic food storage brand ❓ Why: underperformance in direct sales channels, challenges in transitioning to e-commerce, increased costs of labor, freight and raw materials (plastic resin) ✅ Hard Lessons Learned: modernize supply chain to adapt to changing market demands, proactive cost management and sourcing 📒 Note: some of these companies emerged from bankruptcy Any other lessons to add?

Recent risk assessments have highlighted the escalating concerns surrounding macroeconomic and geopolitical risks, particularly in relation to shifts in policies and priorities impacting operations and market conditions. The sensitivity of businesses to geopolitical and security issues, such as tariffs, sanctions, embargoes, and trade restrictions, poses a real threat to operations. To address these risks effectively, proactive risk organizations are implementing integrated risk management practices. These practices involve continuously reassessing enterprise risks, updating exposure information, and aligning operations to develop informed contingency plans. Some of the key considerations and actions being taken include: - Supply Chain Diversification or Re-location: Exploring options to diversify supply chains or relocate operations to mitigate risks associated with geopolitical and macroeconomic uncertainties. - Negotiated Price Lock-ins, Cost-sharing, or Hedges: Engaging in negotiations to secure price lock-ins, cost-sharing agreements, or hedging strategies to manage financial exposure to fluctuating market conditions. - Inventory Buffers: Building up inventory buffers to cushion against supply chain disruptions or delays resulting from geopolitical tensions or policy changes. - Tariff Engineering, Product Reclassifications, or Exemption Filings: Strategizing tariff engineering tactics, reclassifying products, or filing for exemptions to navigate changing tariff landscapes effectively. - 'Wait and See' :): Monitoring developments closely and adopting a cautious 'wait and see' approach to assess the evolving geopolitical and macroeconomic landscape before making strategic decisions. By aligning risk management practices with operational strategies, organizations can enhance their resilience in the face of geopolitical and macroeconomic uncertainties, ensuring a more robust and adaptive business model.

Closing out 2024: From Resilience to Uncertainty, Navigating the New Reality of Supply Chains For years, the focus of supply chains has been on building resilience—ensuring operations could withstand and recover from disruptions. This mindset was born out of necessity, shaped by challenges like global pandemics, regional conflict, trade wars, and natural disasters. The Age of Resilience taught us how to survive in a world of unpredictability. But as we look ahead, we’re entering a new phase: the Age of Uncertainty. Unlike resilience, which centers on bouncing back, uncertainty demands a fundamentally different approach—one that prioritizes flexibility, adaptability, and dynamic decision-making. The challenge is no longer about enduring disruption but about thriving amid constant flux. Why the shift? Supply chain uncertainty is no longer episodic; it’s becoming a constant. Factors like the changing US political environment, geopolitical instability, rapid technological evolution, shifting consumer behaviors, stressed legacy business models and climate-driven disruptions mean that the "new normal" is no normal at all. In this environment, traditional strategies, operating models, tools and processes fall short. Success in the Age of Uncertainty requires embracing innovation to build “future-proof” capabilities and improving upon the age-old blocking and tackling elements of running supply chains through process discipline and growing digital maturity. It’s about building supply chains that are growth focused, configurable, digitally driven, highly autonomous, and resilient. This is an opportunity to rethink and action what’s possible. Companies that approach uncertainty not as a threat, but as a catalyst for future-proofing supply chains, will lead the way. The future of supply chains isn’t just about surviving—it’s about reimagining how we operate in an unpredictable world. How is your organization preparing for the Age of Uncertainty? Let’s discuss

The Global Risks Report 2025 delivers a critical view of the challenges shaping our world—and the role business leaders must play in addressing them. From compounding environmental risks to geopolitical instability, the findings underline a stark reality: we are navigating an era of increasing complexity and interconnected risks. For leaders in sustainability and supply chain, the report offers key insights that demand immediate action: 1. Environmental Risks Are Escalating Extreme weather events and critical changes to Earth systems remain top risks in both short and long-term outlooks. Biodiversity loss and resource scarcity are intensifying pressures across global supply chains. ☑️ Actionable Insight: Leaders must embed resilience into supply chains by adopting decarbonization strategies, leveraging advanced monitoring technologies, and driving supplier collaboration on sustainability goals. PS: nature is a stakeholder too. 2. Fragile and Fragmented Supply Chains Disruptions to systemically important supply chains are an emerging risk, driven by geopolitical tensions and resource concentration. As global interdependencies grow, so too does the need for proactive risk management. ☑️ Actionable Insight: Strengthen supply chain visibility with advanced analytics and digital twin technology. Diversify supplier networks to mitigate resource dependencies and enhance resilience. 3. Misinformation as a Systemic Risk Misinformation and disinformation, fueled by advancements in generative AI, rank as a top risk over the next decade. These issues increasingly intersect with supply chains, undermining trust and transparency. ☑️ Actionable Insight: Invest in secure, robust traceability and blockchain solutions to ensure the integrity of supply chain data. Transparency including lineage and chain of custody will remain a competitive differentiator. Verification-as-a-Service is a key capability my teams are focusing on. 4. Tackling Societal Polarization and Inequality Societal fractures, including inequality and polarization, are both drivers and outcomes of global risks. For businesses, these issues manifest as operational and reputational vulnerabilities within supply chains. ☑️ Actionable Insight: Embed equity metrics into ESG frameworks and design supply chains that prioritize fair labor practices, inclusivity, and shared value creation. The Global Risks Report 2025 makes one thing clear: mitigating these risks requires collaboration, innovation, and decisive leadership. Sustainability and supply chain leaders are uniquely positioned to turn these challenges into opportunities for lasting impact. What risks or opportunities are you prioritizing in 2025? How can we can collectively build resilience and drive meaningful change. ___________ 👍🏽 Like this? ♻️ Repost ✅ Follow me Sheri R. Hinish 🔔 Click my name → Hit the bell → See my posts #Sustainability #SupplyChain #Leadership

We’re entering a new era—one where climate extremes, geopolitical tensions, and trade instability are no longer isolated challenges. They’re converging and compounding in ways that threaten the resilience of our existing food systems. For leaders across procurement, retail, and consumer goods industries, adapting to this new era of compounding risk is no longer optional.   I’m excited to share a new article from Boston Consulting Group (BCG) and Quantis that explores how extreme weather events, conflict, and trade disruptions are reshaping the agrifood landscape and what decision makers must do to stay ahead.   Key takeaways:   · The increasing frequency and compounding of extreme weather and geopolitical disruptions may put further strain on global food systems.   · Production of key crops could drop by 35% by 2050, threatening global food and economic security.   · Building resilience requires a combination of long-term investments in regenerative farming, climate-smart practices, and infrastructure, along with short-term risk management enabled by greater visibility and real-time supply chain monitoring.   · Strategic action today—through more sustainable sourcing and smarter operations—can secure long-term advantage.   It was a privilege to collaborate with Alejandro Navarro, Hamid Maher, Rachel Ross, Arshita Raju, and Charlotte Bande on this important work.   Read the full article to learn how to future-proof your supply chain: https://lnkd.in/erjiMs4q

Transforming Supply Chain Management with Large Language Models (LLMs) In the dynamic world of supply chain management, staying ahead means embracing the latest in technology. Enter Large Language Models (LLMs), the game-changers that are set to revolutionize how we understand, predict, and optimize our supply chains. Why LLMs in Supply Chain? - Predictive Analytics: Imagine being able to forecast demand, supply disruptions, or logistic bottlenecks with unprecedented accuracy. LLMs can analyze vast datasets, identify patterns, and predict outcomes, helping businesses stay one step ahead. - Automated Decision-Making: From automating routine tasks to making complex supply chain decisions, LLMs can process information and suggest actions much faster than traditional methods, reducing human error and increasing efficiency. - Enhanced Customer Service: LLMs can power chatbots and virtual assistants to provide real-time, personalized customer support, order tracking, and FAQs, improving the customer experience and freeing up human resources for more strategic tasks. - Sustainability Insights: By analyzing data on supply chain operations, LLMs can identify areas where improvements can be made for sustainability, helping companies reduce their carbon footprint and meet ESG goals. - Risk Management: LLMs can monitor a multitude of sources to identify potential supply chain risks, from natural disasters to geopolitical tensions, providing businesses with the insights needed to mitigate these risks proactively. Real-World Applications: - A leading logistics company uses LLMs to optimize route planning, reducing delivery times and fuel consumption. - A global retailer leverages LLMs for demand forecasting, significantly reducing overstock and stockouts. - A manufacturing firm utilizes LLMs for supplier risk assessment, enhancing resilience in its supply chain. The Future Is Now: The integration of LLMs into supply chain management marks a pivotal shift towards more agile, efficient, and resilient supply chains. As these technologies continue to evolve, the possibilities are limitless. Get ready to embrace the future of supply chain management with LLMs #SupplyChainInnovation #LLMs #AI #TechnologyInSupplyChain #FutureOfLogistics

While welcoming today's announcement regarding the temporary tariff structure between the U.S. and China I was reminded that this can have significant implications on global supply chain security. The team at Overhaul conducted a quick risk assessment based on the latest news, highlighting the following key points: - The Backlog Effect: With the resumption of significant volumes of cargo movement, there may be surges at major ports, high congestion in distribution centers, and limited transport capacity due to the clearance of previously stalled cargo. - A Prime Window for Cargo Criminals: The period of instability creates opportunities for supply chain crime, with vulnerabilities such as unattended containers, last-minute rerouting, and increased use of under-vetted carriers. - High-Value Targets: Items like semiconductors, AI hardware, EV batteries, medical devices, and luxury goods are at risk of being targeted by criminal networks for theft and fraud. - What to Watch in the Next 30–90 Days: Expect spikes in cargo thefts along re-entry corridors, fraudulent forwarding and brokerage scams, and an increase in cyber-attacks targeting cargo tracking tools. Overhaul recommends the following measures to address the operational risks: - Review SOPs for delayed cargo release and verify carrier credentials. - Implement dual-authentication processes for pickups. - Utilize IoT tracking devices for high-value loads. - Monitor open-source intelligence and dark web activity around major port releases. In summary, while the tariff reduction brings relief, it also poses operational risks. Logistics leaders are advised to approach the next 30 days as a high-risk transition period, emphasizing visibility, verification, and deterrence to combat potential theft, fraud, and infiltration by criminal groups. Overhaul

𝗔 𝗕𝗮𝗴 𝗢𝗳 𝗦𝗮𝗹𝘁 𝗮𝗻𝗱 𝗪𝗮𝘁𝗲𝗿: 𝗪𝗵𝗮𝘁 𝗔 𝗦𝗵𝗼𝗿𝘁𝗮𝗴𝗲 𝗧𝗲𝗹𝗹𝘀 𝗨𝘀 𝗔𝗯𝗼𝘂𝘁 𝗖𝗹𝗶𝗺𝗮𝘁𝗲 𝗥𝗶𝘀𝗸 When Hurricane Helene struck North Carolina, it took out 60% of the U.S. supply of IV saline solution. The Baxter plant—producing 1.5 million IV bags daily—was flooded with four feet of water. Bridges connecting it to hospitals crumbled. Hospitals rationed fluids. Surgeries were canceled. Dialysis and chemotherapy patients were left waiting. Salt and water in a bag—such a simple product, yet indispensable to modern medicine. This wasn’t just a freak storm. It was a wake-up call. Climate change is exposing every weak link in our systems—homes, infrastructure, and now the supply chains we depend on. The “just in time” model isn’t built for a world where storms are fiercer, risks are growing, and vulnerabilities compound. Resilience must replace optimization. Companies, investors, and policymakers must put physical risks to supply chains on the table. The costs of preparation today are always less than the costs of scrambling tomorrow. Because if we can’t protect something as basic as salt and water, what’s next? This IV shortage is a warning. It’s time to act.

Given the speed of digital transformation and innovation, the conversation is no longer just about cyber security. It’s about operational resilience. The conversation CEOs and the Board care about is how quickly the company can recover and continue normal business operations during a major crisis or incident. This is not a question of NIST, MITRE or ISO. Most don’t know about these frameworks and don’t care. Based on my current client initiatives, there are 5 ways the shift from security to resilience is shaping the future: 1. Deep Focus on Continuity, Not Just Breach Prevention: While traditional cyber security emphasized keeping threats out, resilience is about minimizing downtime and ensuring critical operations can continue, even during an attack. Many leaders are incorporating business impact analyses into their asset management and risk management programs. This ties an asset to specific processes and focuses conversations on impacted assets and makes risk quantification more accurate. 2. Cross-Department / Silo Collaboration: Resilience goes beyond the IT and Security teams. It involves HR, legal, operations, and more to ensure that every aspect of the business can respond and recover quickly from disruptions. The culture of the organization will be the biggest obstacle or enabler for response and recovery speed. 3. Regular Simulations and Chaos Drills: Resilient organizations don’t just react to incidents—they proactively prepare with simulations and chaos drills that test their ability to bounce back. If you don’t test alternative processes or minimum process downtime while doing tabletops - you’re doing it wrong. 4. Incident Recovery Speed is the New Benchmark: (Note - the goalpost is now recovery and not just response.) Post-incident recovery time is now as important as breach prevention. Companies that can swiftly restore operations after a breach, like we saw in the #CrowdStrike incident, will have a competitive edge. 5. Third-Party Risk and Supply Chain Resilience: With companies relying more heavily on third-party vendors, ensuring the resilience of the entire digital ecosystem has become a top priority. Transparency across the chain is leading to more monitoring and audits of data flows, integrations and risks for larger entities We are also seeing CISOs move into the CTO and CIO roles. Once a CISO has established the ability to recover quickly in the face of adversity, it’s often considered a critical trait for promotion. Resilience is not just a trait of great leaders, but of great organizations. As cyber threats continue to evolve, resilience will be the foundation that empowers businesses to thrive, no matter what comes their way. It's time we ask ourselves: Is your company prepared and ready to bounce back after a major disruption? #cyberresilience #security #digitaltransformation #CrowdStrike #cyberstrategy #RevolutionCyber

Tariff volatility is here. Can you adapt fast enough? Entering 2025 we are facing a radically altered trade landscape. Tariff proposals range from 10% to 60%.  🚢 Organizations must manage rising costs, sudden supply disruptions, and inflationary pressures, all while contending with fast-changing rules and potential retaliation from trading partners. Yet volatility also creates opportunities for organizations who are prepared. 🧭 𝗚𝗿𝗮𝗽𝗵-𝗯𝗮𝘀𝗲𝗱 𝗱𝗮𝘁𝗮𝗯𝗮𝘀𝗲𝘀 𝗮𝗻𝗱 𝗮𝗻𝗮𝗹𝘆𝘁𝗶𝗰𝘀 𝗰𝗮𝗻 𝗽𝗿𝗼𝘃𝗶𝗱𝗲 𝗿𝗲𝗮𝗹-𝘁𝗶𝗺𝗲 𝗶𝗻𝘀𝗶𝗴𝗵𝘁𝘀 𝗶𝗻𝘁𝗼 𝘆𝗼𝘂𝗿 𝗶𝗻𝘁𝗲𝗿𝗰𝗼𝗻𝗻𝗲𝗰𝘁𝗲𝗱 𝘄𝗲𝗯 𝗼𝗳 𝘀𝘂𝗽𝗽𝗹𝗶𝗲𝗿𝘀, 𝘁𝗮𝗿𝗶𝗳𝗳𝘀, 𝗮𝗻𝗱 𝗹𝗼𝗴𝗶𝘀𝘁𝗶𝗰𝗮𝗹 𝗿𝗼𝘂𝘁𝗲𝘀. Here's how: 1️⃣ 𝗠𝘂𝗹𝘁𝗶-𝗛𝗼𝗽 𝗦𝘂𝗽𝗽𝗹𝘆 𝗖𝗵𝗮𝗶𝗻 𝗩𝗶𝘀𝗶𝗯𝗶𝗹𝗶𝘁𝘆 ↳ Map your entire supplier network as nodes and relationships in a graph.  ↳ Visualize dependencies several layers deep, often hidden in traditional systems. 2️⃣ 𝗗𝘆𝗻𝗮𝗺𝗶𝗰 𝗧𝗮𝗿𝗶𝗳𝗳 𝗦𝗰𝗲𝗻𝗮𝗿𝗶𝗼 𝗠𝗼𝗱𝗲𝗹𝗶𝗻𝗴 ↳ Add tariffs to the graph and then use graph algorithms to simulate alternate sourcing paths with lower duties or better resilience. ↳ This enables decision-makers to test “what-if” scenarios, minimizing guesswork when a sudden tariff spike occurs. 3️⃣ 𝗣𝗿𝗲𝗱𝗶𝗰𝘁𝗶𝘃𝗲 𝗥𝗶𝘀𝗸 & 𝗗𝗲𝗽𝗲𝗻𝗱𝗲𝗻𝗰𝘆 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀 ↳  Apply centrality and community-detection algorithms to find which suppliers or markets could cause cascading failures. ↳  Uncover clusters of high-risk exposure, allowing proactive adjustments rather than reactive damage control. Graph-based platforms help executives move beyond spreadsheets and siloed databases. They offer a living, interconnected view of all the moving parts, enabling better-informed decisions on pricing, sourcing, and expansion. 🚀 𝗔𝘁 𝗗𝗮𝘁𝗮2 𝘄𝗲 𝗵𝗮𝘃𝗲 𝗯𝘂𝗶𝗹𝘁 𝗼𝘂𝗿 𝗿𝗲𝗩𝗶𝗲𝘄 𝗽𝗹𝗮𝘁𝗳𝗼𝗿𝗺 𝗼𝗻 𝘁𝗼𝗽 𝗼𝗳 𝗡𝗲𝗼4𝗷 𝘁𝗼 𝗵𝗲𝗹𝗽 𝗼𝗿𝗴𝗮𝗻𝗶𝘇𝗮𝘁𝗶𝗼𝗻𝘀 𝗮𝗰𝗰𝗲𝗹𝗲𝗿𝗮𝘁𝗲 𝘁𝗵𝗲𝗶𝗿 𝗮𝗱𝗼𝗽𝘁𝗶𝗼𝗻 𝗼𝗳 𝗴𝗿𝗮𝗽𝗵𝘀 𝗮𝗻𝗱 𝗿𝗲𝗹𝗶𝗮𝗯𝗹𝗲 𝗔𝗜 𝗳𝗼𝗿 𝗰𝗿𝗶𝘁𝗶𝗰𝗮𝗹 𝗮𝗽𝗽𝗹𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀. If your organization is concerned about how it can adapt to the new era of trade volatility, reach out and we can start the conversation. ♻️ Know someone who needs better visibility into their supply chain? Share this post to help them out! 🔔 Follow me Daniel Bukowski for daily insights about delivering value from connected data.