A New Type of Supply Risk

Frequent readers of Spend Matters know that supply risk is a major interest of mine. Whether it involves Iran or more traditional types of disruptions, supply risk is beginning to capture the interest and attention of procurement and operations executives world-wide. It's a subject that I've written on for a number of years. You can read the original whitepaper that I co-wrote on the subject here and here. Both sections of the whitepaper are contained in the middle of a longer PDF in the above links. The whitepaper in its original form is MIA on the web, but I'm happy to send a copy of it to anyone who wants it (just email me if you want it).

One of the most critical issues surrounding supply risk is that the threat of disruption is always a moving target. One year, a natural disaster might wreck havoc with shipping lanes. But in the next, the issue might become raw material shortages or labor unrest in a developing region. You never know. Last week, I had the chance to read AMR's take on the potential of Avian Flu to cause massive supply chain disruptions. The article -- and learning center material it links to -- is downright scary. But better to be informed that to be left holding the bag -- or an empty container ship.

In the brief, Tony Friscia cites China as the most critical ingredient in the dangerous brew that is mixing: "The fear today is the size of our global population, the mobility of people within it, and the manner in which global commerce could quickly allow a person-to-person pandemic that started in Asia to spread globally. The mixing vessel to watch is China. Since the last pandemic in 1968, China's population has grown to more than 1.3 billion people from just under 800 million. Since the amount of poultry in China has grown from 12 million to 13 billion since that time, and the transmitter of H5N1 is poultry, the potential for a pandemic to emerge in China is significant. Worse, its position in the global supply network makes the potential for rapid global spread a major concern." Heady stuff.

Jason Busch

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