MOST Analysis

Mission Statement

The lack of a robust process for identifying, prioritizing, managing and mitigating risks is a clear threat to an organization’s supply chain and its strategy. A systematic risk assessment becomes even more important as an organization decides to compete globally and/or to expand its supply chain to other countries and regions. Unfortunately, without a crisis to motivate actions, risk planning often falls to the bottom of the priority list.

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Objectives

01. Critical review of Global Supply Chain Risk: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
02. How Global Supply Chain Risk has evolved over the years; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
03. Core characteristics of Supply Chain risk; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
04. Risk assessment process in Global Supply Chain; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
05. Common risks involved in Global Supply Chains; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
06. Understanding Supply Chain risk management; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
07. Understanding supplier profiles: departmental SWOT analysis; strategy research & development. 1 Month
08. Mitigating transport and logistic risks in a Global Supply Chain: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
09. Practical approaches to build risk resilience: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
10. Best practices for Supply Chain risk management: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
11. Mining for potential Global Supply Chain threats: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
12. Risk and compliance in the global economy: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month

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Strategies

01. Critical review of Global Supply Chain Risk: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
02. How Global Supply Chain Risk has evolved over the years: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
03. Core characteristics of Supply Chain risk: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
04. Risk assessment process in Global Supply Chain: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
05. Common risks involved in Global Supply Chains: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
06. Understanding Supply Chain risk management: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
07. Understanding supplier profiles: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
08. Mitigating transport and logistic risks in a Global Supply Chain: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
09. Practical approaches to build risk resilience: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
10. Best practices for Supply Chain risk management: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
11. Mining for potential Global Supply Chain threats: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
12. Risk and compliance in the global economy: Each individual department head to undertake departmental SWOT analysis; strategy research & development.

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Tasks

01. Create a task on your calendar, to be completed within the next month, to analyze Critical review of Global Supply Chain Risk.
02. Create a task on your calendar, to be completed within the next month, to analyze How Global Supply Chain Risk has evolved over the years.
03. Create a task on your calendar, to be completed within the next month, to analyze Core characteristics of Supply Chain risk.
04. Create a task on your calendar, to be completed within the next month, to analyze Risk assessment process in Global Supply Chain.
05. Create a task on your calendar, to be completed within the next month, to analyze Common risks involved in Global Supply Chains.
06. Create a task on your calendar, to be completed within the next month, to analyze Understanding Supply Chain risk management.
07. Create a task on your calendar, to be completed within the next month, to analyze Understanding supplier profiles.
08. Create a task on your calendar, to be completed within the next month, to analyze Mitigating transport and logistic risks in a Global Supply Chain.
09. Create a task on your calendar, to be completed within the next month, to analyze Practical approaches to build risk resilience.
10. Create a task on your calendar, to be completed within the next month, to analyse Best practices for Supply Chain risk management.
11. Create a task on your calendar, to be completed within the next month, to analyse Mining for potential Global Supply Chain threats.
12. Create a task on your calendar, to be completed within the next month, to analyse Risk and compliance in the global economy.

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Introduction

Introduction to Global Supply Chain Risk Analysis

Risk assessment and analysis in the supply chain is a necessary evil today. Organizations have to ensure that they have all corners covered and are ready for the complications involving these processes. This introduction will take you through all that you should know to learn more about risk in the global supply chain, and the issues it can lead to.

Risks in the supply chain have evolved to become even more prevalent and common with time. The risk management strategies that businesses implemented and followed in yesteryears have failed to stack up in this day and age. The policies of days gone by have failed to maintain their efficacy during these modern times, and businesses now have to improvise and adapt to the changing environment.

No type of provider can avoid the risks of a global supply chain today. Even with the growing addition of security across the supply chain, risks exist across ocean, land and air freight. These risks are often unavoidable and inevitable for global supply chain businesses, since there is no way around them.

Definition of Risk

Traditionally, risk has been defined as an amalgam of two factors – a particular hazard and the chances or likelihood that the hazard will occur. To simplify this definition, risk is the probability or likelihood that a hazard such as financial fraud will occur inside a business.

As per environmental and human rights terms, this definition of risk translates into identifying all environmental and human rights violations that can result through a supply chain including pollution incidents, forced labor, and coming up with a probability for their likelihood.

Going by these terms, risk can be considered theoretical, and something that has a negative impact, which can potentially damage a business and hasn’t yet happened.

The aim behind risk assessment processes in the supply chain is to identify all potential sources of risk in the supply chain and to grade or prioritize them on the basis of their importance. As studied in previous sections, the importance of risk is evaluated and determined on the basis of the impact that the risk carries. The aim of risk management, on the contrary, is to reduce the likelihood or probability of these hypothetical problems and ensure there aren’t any roadblocks along the way. It is necessary for all supply chain stakeholders to have a clear understanding of the risk assessment and management processes. Where risk assessment deals with prioritizing, assessing and grading risk, risk management deals with managing and mitigating their impact. Risk assessment puts down the foundation for what’s to follow during a typical risk management process.

Who Is at Risk?

There are many areas of risk inside an organization. These areas can have different impacts, often leading to complications in revenue generation and profitability. There are many areas of risk, with the greater ones leading to a loss of business, financial failure and major interruptions to operations in a number of different ways.

When it comes to human rights and sustainability risks, the discussion hovers around the impact the risk will have on the outside environment and the reputation of the supply chain and parent organization. While organizations often look through the lens of profitability, they have now realized the importance of providing friendly working conditions to workers and practicing sustainable measures for protecting the environment from the perils of industrial smoke and transportation inefficiencies.

Risk Assessment and Compliance

A publication released back in 2011 by UNGP provided businesses with a framework they should follow for not only understanding their own responsibilities, but to also come up with a plan to mitigate and minimize the likelihood of risk. Human rights risk assessment is of great concern to the United Nations and was highly emphasized in the document.

When it comes to human rights risks, organizations should run consultations with all business stakeholders and determine strategies to combat risk. Stakeholders such as business partners, communities, employees, NGOs and even trade unions can share valuable insights into the process of policy making and setting the right course for risk management.

The UNGP made it clear within this document that the primary responsibility of ensuring human rights lies with the State. The private sector should uphold and comply with the laws mentioned by the State and should also be responsible toward respecting and promoting human rights. Private sector entities should realize the negative attributes that come with their management styles and what can be done to limit them.

Compliance with the laws and regulative measures is necessary, but it isn’t the only thing organizations are required to do today. Organizations in the business world today are required to also maintain a strict code of conduct, based on which they perform in a particular manner toward employees and the environment.

Most developing countries have concrete laws in place for risk management but lack the steps that should be taken here. The lack of proper steps and decision making can lead to companies exploiting labor and not giving human rights the importance they should be given. Companies have a responsibility of their own as well and should go beyond simple legal compliance to remain on the right side of ethics and the law.

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Common Worker Rights and Environmental Risks Ignored by Supply Chains

There are a number of sustainability and human rights issues that businesses today can focus more on. The UNGP has termed the risks below to be the most salient ones and has crafted a policy to ensure businesses comply with risk management in this regard.

Fundamental Labor Rights

Workers suffer during the non-implementation of fundamental labor rights. The inability to provide these risks can land supply chains in hot waters.

Rights violations made here include:

• Forced labor
• Child labor
• Discrimination in employment toward people of a particular religion or caste
• Lack of respect for worker freedom and unions

Working Conditions and Remuneration Risks

Obviously, employees need to be given feasible working conditions to work in and should also be given the wages and remuneration they require. Risky violations that shouldn’t be made here include:

• Wages below the minimum wage level decided by the governing organizations
• Excessive hours of work
• Abusive treatment leveled toward employees for no violations as such
• Health and safety breaches
• Lack of access to the grievance mechanism
• Abuse of contracts

Social and Economic Rights Violations

These risky violations are mostly leveled on communities near the supply chain and manufacturing unit. The inability to address these violations can leave organizations with lasting repercussions, along with a supply chain that may never recover.

The risk factors involved in these violations include:

• Noise and air pollution affecting the local population in a specific area
• Emissions impacting the local water supplies or an improper drainage system
• Road transportation methods that create traffic constraints and lead to challenges
• Land grabbing activities without proper legal compliance

Civil and Political Rights Violations

Violations of civil and political rights are conducted by global supply chains and operators on communities and their own employees. These risk factors are a show of power and limit the voices against regressive policies.

Violations that can lead to this risk include:

• Preventing workers from forming unions and being part of unions together
• Collaboration within companies and security forces to repress community complaints against regressive measures
• Bribery and land grabbing policies

Sources of Risk

Risk can come at you from multiple sources or dimensions. Obviously, it is very hard to manage or determine where risk is coming from, but a simple grouping can help you determine the course of action.

For supply chain managers, the sources of risks are of key importance. These sources are a major part of the risk and need to be fully minimized or mitigated if a strategy is to be prepared. Sourcing your risks and being prepared for them can also lead to the aversion of possible dangers that result because of the risk.

Also, risk categories and sources aren’t meant to be exclusive. This means that the category basically operates as a tag or a label and that the risk in question can have more than one tag. In short, most risks are generated through inefficiencies in multiple sources and not just one.

Typical risk categories include:

• External
• Internal
• Project
• Product
• Technical
• People
• Organization etc.

External Risk

An example of an external risk for a global supply chain operator would be a supplier missing their deadline and delaying the shipment that they have to provide. These delays cannot only lead to customer retention issues, but also signal problems in revenue generation. However, since supplier delivery timelines are often out of the organization’s control, there isn’t much that can be done about them.

This is something that we discuss in greater detail within the rest of this chapter as well. Supplier relationships are a key part of averting supply chain risk, and with good relationships, organizations can mitigate and minimize the chances of risks.

Internal Risk

Internal risk factors co