How Data Makes the Difference for Supply Chain Vigilance

Supply Chain Disruption Is Inevitable 

Ask anyone managing procurement or supply chains today, and they’ll likely tell you that this is unfortunately true; disruptions are inevitable, and they always have been. Macroeconomic and geopolitical factors, as well as unexpected disasters, make them more pronounced and problematic.

Every new crisis acts as a not-so-subtle reminder that businesses must remain vigilant about potential risks. And a big part of that vigilance, as well as the ability to mitigate disruptive impacts, is having access to better supply chain data — and knowing how to work with it.

Which raises some important questions. For example: 

• How can procurement and supply leaders employ data to integrate risk management more effectively into their plans? 

• What kinds of data are most valuable? 

• To what extent can third-party data play a role?

Welcome to the “Perma-Crisis”

Indisputably, we’d all like to see less volatility and uncertainty in the global landscape. Ascendant risk factors including climate risk, cyber threats, logistics risks, and rising costs make this increasingly unlikely. This means that supply and procurement people have to stay focused on risk management and mitigation efforts. Having a “Plan B” — and even a “Plan C” depending on the complexity of your supply chain — should always be a top priority. 

How can you be better prepared for the next disruptive event? By cultivating greater vigilance and greater resilience — two critical goals that are needed to mitigate risk, as well as to maintain business stability and continuity. And this is where data can make a big difference.

The Six Main Causes of Supply Chain Disruptions 

Each of the following categories has a common denominator: no procurement or supply chain professional has any control over their occurrence. But they all generate data that supply management teams can use to help predict, plan for, and better understand the real causes of supply disruptions. 

1. Geopolitical Events

As soon as more than one border is involved, there can be challenges to maintaining a smoothly functioning supply chain, from tariff clashes to trade disputes to military conflicts.

2. Natural Disasters 

In recent years, there has been a palpable increase in environmental catastrophes worldwide. Whether it’s flooding, hurricanes, mudslides, forest fires, monsoons, or extreme temperatures, each can significantly impact a supply chain.

3. Market Events

The pandemic made everyone aware of how the volatility of the markets influences supply chains. Today, product lifecycles have become shorter and more complex, largely due to the influence of social media. Consumer demand and reduced tolerance for supply shortages only adds to an already massively competitive atmosphere among suppliers, distributors, vendors, and retailers. 

4. Societal Trends 

Events during and after the pandemic have also accelerated several social trends. Remote work, changing employee expectations, unionization, modified labor practices, a deeper understanding and urgency around diversity, equity, and inclusion — all these trends have had a direct influence on the logistical systems of procuring and distributing goods and services.

5. Business/Technology Issues

There are many risks that businesses must address continually to remain viable and competitive. They may be operational risks — the result, for example, of inefficient manual process. Or they may be reputational risks, like those associated with doing business with a potentially nefarious organization. Or a technology-related risk, such as a massive data breach or cyberattack on a company’s website. 

6. Regulatory Compliance 

Government and industry regulations focused on sourcing, manufacturing, and trade practices continue to have significant effect on the management of workable supply chains. For example, as more companies embrace ESG practices, it becomes imperative to source goods and services from providers with similar goals. 

No one is immune to these disruptions, and they often happen on a global scale. Just one example: the severe drought that affected water levels in the Panama Canal through much of 2023 and into 2024. Cargo vessels faced tough restrictions and long wait times stretching into weeks to transit the canal. Many of the United States’ agricultural exports, such as grains and oilseeds, pass through the canal bound for Asian markets. Extended delays at the canal can result in shortages of those products in those markets, as well as higher shipping costs.

Another example: Supply sources for certain raw materials, such as gallium and germanium, are being constricted by geopolitical tensions involving China and other geographies that serve as alternate sources of these materials. Shortages of these materials would cause strain for multiple industries including electronics, clean energy, aerospace, automotive, and defense.

The key to overcoming these disruptions — actual and potential — is to pay attention to them, and to understand the qualities your risk data needs to have to be truly useful for planning and decision making. 

Learn More About the Role of Data in Supply Chain Risk Management

Our eBook, How Data Makes the Difference for Supply Chain Vigilance, delves more deeply into the different kinds of internal and external supply risks and how you can detect and address them before they become problematic. It also contains practical steps you can take to integrate better data into your risk mitigation capabilities, which will serve you well regardless of the prevailing business climate. Download your copy today.