The past two years have provided hard lessons about the pitfalls of globalization and its impact on the exchange of goods and materials across borders. Unprecedented events – the pandemic, blocked ports, and geopolitical events around the world – have stretched supply chains to the breaking point.
In February, the New York Times reported that a return to supply chain normalcy is “unlikely” in 2022. In March, the Harvard Business Review published a provocative piece about supply chain woes: “Are the Risks of Global Supply Chains Starting to Outweigh the Rewards?” The World Trade Organization forecasts that Russia’s invasion of Ukraine could cut global trade growth this year almost by half – mainly by disrupting supply chains connecting the two countries to the rest of Europe and the world at large.
To further illustrate how this single event has ripple effects around the world, Dun & Bradstreet economic and analytics experts published a report on the Russia-Ukraine crisis, highlighting the vast commodity flows these two countries contribute toward, including 59 percent of global sunflower oil exports, 36 percent of global iron or non-alloy steel exports, and 26 percent of global wheat exports. Beyond exports, the Dun & Bradstreet data demonstrates the interconnected nature of global trade where the crisis can impact business activity. For example, Russian entities have thousands of first-tier supply chain relationships and millions of second-tier connections.
There is no doubt that private-sector companies and government agencies – civilian, defense, and intelligence – have been impacted by the barrage of unexpected and unprecedented events. Constant disruption is our new normal, and this is why the administration recently released its Freight Logistics Optimization Works (FLOW) initiative with a focus on “addressing supply chain vulnerabilities and congestion, working to speed up the movement of goods, and lower costs for families.” FLOW goes on to say that “we can further strengthen our goods movement supply chains by making a similarly bold improvement in a digital infrastructure to connect the supply chain.” How can agencies help move this initiative forward?
A Call for Advanced Technology and Analytics to Manage Risk
The emergence of COVID-19 two years ago was the first wake-up call for procurement and supply chain leaders as they clamored to secure new vendors from around the world that could supply critical personal protective equipment (PPE) and other medical resources. While the crisis of the moment often takes away from planning for the future, it’s important that agencies act now to preserve our nation’s future supply chain.
In order to avoid the worst consequences of supply-chain disruptions, it is essential that agencies leverage data-driven risk management solutions with advanced technologies such as machine learning and artificial intelligence to predict supply chain problems before they happen.
The Power Is in the Data
To begin, agencies should consider using a technology platform that taps into data that is globally comprehensive, updated regularly, and adheres to privacy regulations. And when looking at data sources, it’s important to use a combination of trusted first- and third-party data to unearth insights on potential suppliers’ financial health, linkages and hierarchies. This will help an agency better understand an organization’s business activity, and their connections to other organizations around the world, prior to engaging with them. Analytic insights can also illuminate whether an organization has been involved in fraudulent activity or should be avoided – a key piece of insight today as agencies question their vulnerability to foreign influence and potential threats to government resources and programs.
Creating an Agile Supply Chain Starts with Knowing All Tiers of Suppliers
Disruptions are inevitable, so it’s important that agencies better understand and build strong relationships with a geographically diverse set of suppliers across all tiers. With robust data and acute analysis, it’s possible to get a pretty good idea of where supply-chain issues are likely to emerge – and to have a head start in mitigating those risks. In fact, validating and onboarding alternative suppliers is key to the success of a long-term, more agile management strategy, as supply chain leaders can monitor supplier activity in real time to identify potential risks such as port closures or natural disasters, and then pivot at any time to suppliers in less-impacted regions.
Mitigate Risk by Staying Ahead of the Problem
The goal is to stay ahead of potential problems by spotting them on the horizon – before it’s too late. Data is part of the solution, but it’s not a panacea. Without analysis, data is of little value. Numerical information makes sense when an agency has the capacity to connect the dots and form a coherent picture of emerging risks. When advanced technologies and analytic insights work well, data flows and distills into what amounts to a flashing warning sign, a can’t-miss beacon that draws attention when something is amiss, enabling agencies to make better-informed strategic decisions.
While we can’t predict the next big disruption, we can ensure that our supply chains are fortified and resilient enough to pivot and weather any unexpected event in the future.
The views expressed here are the writer’s and are not necessarily endorsed by Homeland Security Today, which welcomes a broad range of viewpoints in support of securing our homeland. To submit a piece for consideration, email [email protected].
