Supply Chain Operational and Geopolitical Risks in an Age of Slowbalization

Supply Chain Operational and Geopolitical Risks in an Age of Slowbalization

Greg Collins
Department of Supply Chain Management
W.P. Carey School of Business
Arizona State University

Adegoke Oke, PhD.
Professor and Chair of Harld E. Fearon Fellow, CAPS Research
Department of Supply Chain Management
W.P. Carey School of Business
Arizona State University

In recent years, supply chains globally have experienced unprecedented disruptions and faced increasing risks. Many sources of risks are both known and unknown, controllable and uncontrollable.

For many global firms, the accumulation of these risks are amplified by the structural realignment of supply chains in this era of “slowbalization,” a period of slowing international economic exchanges and a shift away from rapid globalization towards more localized or regionalized economic activities.

Faster Cycles of Risk

In turn, executives and supply chain professionals have to adapt to faster cycles of risk planning, stress testing, mitigating and responding to disruptions just as they are restructuring operations and supply bases in a high inflationary and interest-rate economic environment.  Supply chain resilience, sustainability and end-to-end visibility have taken on more urgency than ever in supply chains today. 

After 30 years of rapid global GDP growth, these are daunting tasks driven largely by consolidating industry supply chains in stable, low-cost supply chain ecosystems, many in China and Asia. 

Reducing Uncertainty

Reducing uncertainty and exposure to risks is a key objective for most firms. At the same time, managers battle daily with managing or mitigating risks with a highly variable ability to accurately assess or measure risks, let alone mitigate crises and activate countermeasures.  From an operational standpoint, managing known-unknown and controllable risks in the supply chain is a daily activity, and the traditional supply chain toolbox of, for example, diversifying suppliers, maintaining buffer inventories, automating non-valued added processes and supplier management are still as effective as ever as risk management tools. 

However, geopolitical risks tend toward the unknown-unknown and uncontrollable variety of highly unpredictable risks that can have devastating results.  Many geopolitical disruptions, as we have seen in recent years, for example, in Ukraine and the Middle East, were impossible to plan for and costly to respond to for affected industries and businesses. 

CAPS Report

A recent report from CAPS Research compiles insights from more than 50 supply chain executives to investigate how global firms assess, manage, and justify the strategies they utilize to mitigate operational and geopolitical risks. A key takeaway from this report is the risk decision matrix that incorporates a proposed assessment methodology, mitigating actions, and justifications for use for each potential risk discussed.

CAPS members can read the full report in the library. 

Click to here to read more.

 

CAPS is a B2B nonprofit research center serving supply management leaders at Fortune 1000 companies. CAPS Research inspires leaders with profound discovery and executable strategies to shape the future of supply management. Research reveals the destination, benchmarking charts the course, and networking creates the path to transformation. All CAPS offerings are sales-free, bias-free, and practitioner-driven. CAPS was established in 1986 at the W. P. Carey School of Business at Arizona State University in partnership with the Institute for Supply Management. Learn more at www.CAPSResearch.org.