Risk Factors Abound

Akey supplier or buyer can be debilitated for a number of reasons: natural (floods, pandemics, earthquakes, severe storms), human (terrorism, civil disorder, electronic security breaches) or technical (power failure, hardware or software viruses). These events can have dramatic effects on supply chain partners both upstream and downstream.

A single disruptive event in Asia, for example, could initiate a customer service nightmare in the United States. And disruptions are more common than one might imagine – a 2012 survey of over 500 companies from 68 countries across 14 different industry sectors revealed that 73 percent of respondents had experienced a supply chain disruption in the last 12 months, not only affecting top and bottom lines but also damaging their brands and relinquishing market share. Potential effects of supply chain disruptions could include the following:

  • Reduced market share
  • Loss of customers
  • Damage to image, reputation or brand
  • Higher cost of capital
  • Potential breach of contract
  • Failure to meet legal or regulatory requirements
  • Decrease in sales and increase in costs, from which many companies never recover

Managing Risk Across the Supply Chain

While lean manufacturing has become a cornerstone of successful supply chain management and a way for businesses to stay flexible and responsive to changing tastes in their markets, the dependence on and relationship with suppliers resulting from outsourcing and minimizing stock creates a host of exposures. Successfully navigating and managing the risks presented by a convoluted supply chain that spans across regional, national and especially international territory is a complicated endeavor considering the countless precarious factors that can cause disruptions or liability issues across the entire supply chain.

Considering Your Liability

Worse, companies can be held liable for their supply chain partners’ mistakes. A defective or inherently dangerous product or part can cause liability issues for its designer, off-shore manufacturer, shipper, wholesale distributor, retail seller and installer, who are collaboratively and jointly responsible. In fact, even though a seller has exercised all possible care in the preparation and sale of the product, it can still be held responsible. Wholesalers or finished product manufacturers can be sued by an injured third party individually or together with any or all other parties involved in bringing the product to market and selling it to the consumer. Engaging supply chain partners and insurers in your effort to minimize supply chain risk and regularly reassessing exposures can help you to successfully manage your business’s risk from beginning to end of the supply chain.

Market Financial Group, can help you every step of the way. Contact us today to get started +1 888 459 3301.

Any Questions? How can we help?