Labor Shows its Discontent Raising Supply Risk

It's not just white-collar workers who are losing their jobs in the recession. It's laborers as well; many of whom have enjoyed significant protections from unions over the years, driving up the cost of production for many companies (and even driving some companies out of business). In a recent article, Supply Chain Digest describes a scene of rising labor unrest in Europe which has the potential to spread to the US. Noting that "the kettle has already started to boil in Europe, with wildcat strikes across the UK, France, and Germany last week, and labor leaders challenging politicians at the normally placid World Economic Forum in Davos, Switzerland," the article suggests labor may very well become a significant risk for companies. In France, such activity caused minor logistics disruptions in January thanks to a 24-hour strike carried out by rail, airport and seaport workers. Is this the start of potential supply disruptions to come? According to Stratfor, who is quoted in the article, "conditions certainly exist for massive social unrest in Europe in 2009."

I have longed believed that labor presents a major form of supply risk that organizations should track and monitor -- at all tiers of their supply chain. Whenever possible, organizations should make sure they at least balance union-suppliers with non-union suppliers (when it was not viable to source from non-union entirely) to avoid potential disruptions from strikes. By putting in place a risk management or supplier information management toolset that captures and monitors labor practices and labor information, organizations can proactively take action when it looks like labor unrest may be coming around the corner. I believe that approaches such as this will be all the more critical if the Obama administration and Democratic Congress are able to expand labor's influence and penetration in the workforce. For the better or worse -- and whether you support unions or not -- we can all agree that passing labor supply risk onto shareholders and customers is not an option worth considering.

- Jason Busch

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