Managing risk gets more complex as the ripple effects of terrorism place new stress on supply chains.
Terrorist attacks such as this spring’s tragedies in London and Manchester, England, send chills through communities large and small while heightening national security measures around the world — but they also represent a growing threat to local and global supply chains. Sadly, in an era of heightened business risk, companies up and down the supply channel are finding it increasingly necessary to add terrorism to the burgeoning list of supply disruptions they must prepare for and protect against. To that end, companies must work more closely with their suppliers to ensure business continuity planning in the face of such manmade disasters.
Jim Yarbrough, global intelligence program manager for research and consulting firm BSI Supply Chain Services and Solutions, notes that in the last 10 years the supply chain has been a target of terrorist attacks somewhere in the world on average three times a week—a statistic he says has jumped to six times per week in the last two to three years, according to BSI research. BSI began studying the intersection of terrorism and supply chains 10 years ago, and today warns against the threat of business disruption on multiple levels due to increasing terrorist activity around the world.
“The supply chain is difficult to protect, making it a soft target that can have a big impact,” explains Yarbrough. “It is an attractive target for groups that want to disrupt global business. On top of that, any time a terrorist attack occurs, we see things like increased inspection activity and delays in moving cargo—making this an important issue whether or not your industry is targeted. In general, these acts open the door to a larger threat to the supply chain.”
Yarbrough’s points are highlighted in BSI’s recently released, Annual Global Supply Chain Intelligence Review: Supply Chain Threats, Risks, and Trends. The study points to recent events across Europe that have affected local and global commerce and offers advice on how companies can work with suppliers to mitigate risk. Here are two ways to do so:
Identify “Choke Points”
The BSI report notes that most companies have a good handle on what do in the event of a tragedy at their own facility, but have little knowledge about what the same event could do to their suppliers. Identifying “choke points” that could stop the movement of cargo, and evaluating potential risks at those locations, is a key first step to addressing this issue. Scenario planning can help identify which suppliers are most at risk, allowing companies to then test whether or not those suppliers have robust contingency plans in place.
“We never propose that people stay away from particular [regions],” says Yarbrough, emphasizing instead the need to properly vet suppliers to make sure that their standards for dealing with supply disruptions are as thorough as your own. This can be done via open conversations and meetings, or on a more complex level with assessment tools and technologies. “The goal is to create resilient organizations that can withstand all threats.”
“Too often, people operate in silos,” Yarbrough explains. “In the best organizations, all components are working in conjunction to create clear, open communication lines.”
In this sense, ownership of the supply chain runs across organizations and extends to supply partners as well. “We are responsible for protecting our own organizations, but we must also focus on how well we are protecting the [broader] supply chain,” Yarbrough says. “[Maintaining] the integrity of the supply chain should be shared across the supply chain.”
Beware of Supply Chain Exploitation
Recent attacks in Europe reveal the supply chain’s vulnerability when it comes to perpetrating attacks. The July 2016 attack at Bastille Day celebrations in Nice, France, and subsequent December attack at an open-air market in Berlin, are cases in point. In both situations, Tunisian men linked to the Islamic State in Iraq and Syria (ISIS) used cargo trucks to drive into crowds of civilians. In Berlin, the attacker had hijacked a Polish tractor-trailer carrying a shipment of steel beams.
“ISIS-linked plots involving similar timing and tactics are likely to continue challenging European security into 2017,” the report authors noted.
Yarbrough adds that such events lead to heightened security and inspections, delayed shipments, and slowing supply lines—factors that underscore the need for greater collaboration and preparedness among supply chain partners. Yarbrough says large companies are beginning to heed the call for greater focus on these issues, but he adds that raising awareness about the link between terrorist activity and supply chain continuity remains a difficult task.
“In some cases, companies have been caught looking the other way and in other cases, companies are looking to develop best practices,” he says of those firms that are putting the issue front and center in their risk management strategies. “But it’s a challenge to get this issue out there to the larger community.”