Although there is increased awareness about the need to build supply chain, it's clear that guarding the supply chain is not only a responsibility falling on corporate shoulders.
Since the global supply chains are increasingly exposed to greater complexity, risk and economic and political volatility, countries and governments are also re-evaluating their resiliency track record. It's a trend that was sparked in the aftermath of the tsunami and earthquake disaster that rattled Japan a few years ago. And, because countries are now also competing with each other to attract new development, talent and manufacturing and service-related operations, they need to improve their resiliency strategies and performance to gain foreign and corporate investment and trust.
The recently released 2015 FM Global Resilience Index highlights which countries are performing well in terms of resiliency, and where work yet needs to be done. EBN's Editor-in-Chief Hailey Lynne McKeefry wrote about the rankings here.
While these kinds of indices can help companies assess risks they and their suppliers, manufacturing partners and customers may face in certain regions and influence future site selection decisions, they also provide a snapshot into the expanding list of factors that can swiftly change a countries resiliency profile year-over-year. If companies can't control all these risk factors and supply chain executives are still looking for ways to justify investment in resiliency-building practices to their board of directors, imagine how this conversation must unfold among politicians in cash-strapped nations. It's got to be a tough thread to follow.
For example, look at the big difference between Ireland and Greece, both of which suffered stiff blows during the recession. Ireland was able improve its top 10 resiliency ranking because of its low exposure to natural hazards and the positive result of austerity and fiscal measures. Meanwhile, Greece, which is in the news everyday as European officials wrestle through another bailout, lost a lot of ground because of their ongoing high debt and anti-austerity sentiment combined with its earthquake risk.
But, some things are less tangible and more based on perception. France fell slightly in the ranking due to a rising risk of terrorism (the attack of newspaper Charlie Hebdo's offices in Paris, in an example many people will remember) and its worsening perception both of the country's infrastructure and the quality of local suppliers. Though still lower on the index, Romania, a darling country for high-tech manufacturing outsourcing, moved up 25 spots on the list because it took steps to improve the quality of its infrastructure and its perception of local suppliers was better than the previous year.
Complicating matters are things like water scarcity and conservation, environmental sustainability and disaster mitigation and prevention. Countries are grappling with how to handle these dilemmas. Asia, for example, is facing a looming water crisis and it will affect the region's commercial activity, Eco Business reported in mid-July, citing data from CDP (the international nonprofit formerly known as the Carbon Disclosure Project). Depending on how countries manage or mismanage this issue, it could lead to innovation and economic prosperity or business failure.
These external risks have existed forever, but now they have more impact on the bottom line – of corporate balance sheets and of human wellness. Maybe it's time to stop partitioning out risk and resiliency into shortsighted corporate initiatives that win temporary attention or government-approved capex construction projects. Maybe it's time to step back and see the whole picture and find collaborative, sustainable solutions that go ranking beyond risk perception and address the entire scope of potential issues.
Which risk and resiliency factors do you consider when evaluating a country? How do you think governments and companies can work together in creating resilient supply chains?
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