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Single Point of Failure

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Single Point of Failure

The Ten Essential Laws of Supply Chain Risk Management

Wiley,

15 min read
10 take-aways
Text available

What's inside?

CEOs must pay attention to risks that lurk within their supply chains.

Editorial Rating

8

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  • Applicable

Recommendation

The captain of the Titanic ignored at least five warnings that unusual conditions in the Gulf Stream made it dangerous to steam at high speeds through the North Atlantic – if only he had paid attention. CEOs usually don’t seek or receive advance alerts of the looming icebergs that could affect their supply chains, the interconnected links that enable companies to move raw materials to production facilities and thence to customers. Now, you can be prepared, thanks to supply chain risk management expert Gary S. Lynch, who details the 10 best ways to manage and mitigate supply chain risk. getAbstract recommends his insights – despite a peppering of jargon – to executives handling all aspects of corporate life, including risk, manufacturing, compliance, operations, logistics, outsourcing, procurement and security.

Summary

“The Laws of the Laws”

All companies, no matter their industries, products or locations, are members of complex, convoluted and interconnected supply chains. Any unexpected event – a labor strike, a hurricane, a product recall, a commodities price hike, a power failure, a biochemical disaster, a political revolution – that harms any link of a supply chain can have a devastating effect on all the other links, including those that most people would never imagine are connected.

To illustrate, consider this scenario: As a result of a large decrease in housing construction, a shortage of sawdust develops into “a single point of failure.” Prices for sawdust skyrocket from $25 per ton to more than $100 per ton. This affects farmers who use sawdust as bedding for their animals. Particleboard manufacturers suffer because sawdust is one of their vital raw materials. Other affected industries include wineries, auto manufacturers and oil-drilling rig operators – all of whom face harm because of a shortfall in sawdust, a very mundane material. Given that, consider the impact of changes in crucial commodities: for example, the global economic losses when oil prices rise. Or note...

About the Author

Gary S. Lynch, author of At Your Own Risk, leads Marsh Risk Consulting’s Supply Chain Risk Management Practice and directs its Global Pandemic Response Center.

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