Globalization has created new opportunities and new threats. As sourcing from around the world made supply chains longer and more complex, the volatility inherent in production significantly increased. The number of supply chain members and the interactions among them has grown, exacerbating the lack of transparency in the operating environment. Company executives have increased profitability through ever-shorter times-to-market and product life-cycles, business processes improvement, just-in-sequence manufacturing, or vendor-managed inventory. But the technological progress, strategic partnerships and vertical integration that drove cost reductions also added to the supply chain’s vulnerability. Indeed, global supply chain (SC) networks are exposed to a number of potential threats, which themselves are constantly evolving.
SC networks are dynamic complex systems. They are not static. The structures evolve. Local disruptions typically propagate and lead to production shortages and contagion. We can identify the most important nodes in the network by measuring connectivity and embeddedness. But with research on logistics clusters gaining influence, it is important to draw attention to the fact that clusters create both synergies and shared risk, a reality not adequately addressed by current discussion.
Authors: Bublu Thakur-Weigold, Kamil J. Mizgier, Stephan M. Wagner
Source: Ivey Business Journal
Subject: Risk Management
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