Only as Strong as the Weakest Link

This article discusses why companies need to shore up their supply chains to guard against disasters. Supply chains, which provide raw materials and distribute finished goods to end customers, now extend through many independent companies, and nearly every chain is global. As a consequence, major events from around the world, both natural and man-made, affect the flow of goods and have an increasingly sharp and visibly evident impact on businesses. It is therefore essential that companies identify their entire upstream supply chain—not just their tier-one suppliers but all suppliers and subsuppliers . They should try to understand their downstream customers and intermediaries as well. Businesses also need to conduct a vulnerability assessment for their extended supply chain, not just internal operations. This includes assessing geographic risk, organizational risk, embedded risk, and supplier risk. Organizations should also develop a plan to create a culture that supports supply chain risk management, including active risk monitoring, education, training, and simulation exercises.