Egypt – country level risk needs to be on the supply chain agenda

The tragic events in Egypt are a reminder of how fast things can change.  Not long ago, it was seen as one of the most stable, open and successful countries in the region. Indeed, it was being presented as a promising location for outsourcing from Europe or the US, with an educated population,  a convenient time-zone and an apparently stable political situation. There won’t be many firms writing the business case for outsourcing to Egypt right now, we can probably assume.

Again, this illustrates the importance of looking at supply chain risk at all levels, from geo-political risks such as political collapse or even civil war, through to the more mundane (but still important) around supplier poor performance or internal non-compliance.

And what is the outlook for other countries? And how do procurement and supply chain executives keep up with developments? There are many firms offering services in this area. The economics research firm Roubini for instance produce “Country Insights” based on their economic research and analysis. Interestingly, their ranking of countries (see here ) has Egypt mid-table, which suggests there are other countries that also deserve our attention if they are locations for key suppliers.

For instance, my mind turns to Indonesia  -  a huge success story over the last few years, with considerable inward investment, but a nation with a less than stable past. My sister and family have lived there for 20 years plus, and have seen a few interesting moments in that time.

As well as carrying out or buying in research, we might also look at insuring against some of these risks, hence the  insurance companies obvious interest in the area. Aon offer political risk insurance, and they comment: “Aon’s Political Risks Map noted an almost 50% increase in supply chain disruption due to government embargoes, interference and strikes, riots, and civil commotion”.

At Zurich Insurance, Nick Wildegoose moved from the Procurement Director role a while back into a customer facing post as Global Supply Chain Product Manager – a indication of the importance the large insurance firms are placing on supply chain issues and products. They have some good material available on their website as well, like this collection of articles.

So take a good look at where there may be country level issues in your supply chain, and develop approaches to reduce, manage or insure against the risk – or simply accept it, which is always an option. But if you do simply accept any major risk, that should be a strategy which is chosen after due consideration, not merely arrived at through omission!

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