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Risk Management

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kirakent18
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GROUP 3

SUPPLY CHAIN
VULNERABILITIES IN A
CHANGING BUSINESS
ENVIRONMENT

Trends, Integration, and Geopolitical Challenges


01 Trends In The Supply Chain
Supply chains today are under constant evolution, influenced by technological
advancements, globalization, and geopolitical shifts. Companies are facing new
vulnerabilities, from cybersecurity threats to resource shortages, and adapting to these
changes requires agility, innovation, and resilience. Technologies such as AI, IoT, and
automation are reshaping the way businesses manage their supply chains, while issues
like globalization and geopolitical tensions present new risks and challenges.
Some notable trends include the use of AI and automation, Sustainability and
circular supply chains, the usage of the internet of things, supply chain as a service and
finally last mile delivery optimization
02 Drivers causing the changes?
• Realization that logistics is expensive and gives opportunities for substantial savings;

• Emphasis on customer satisfaction and its dependence on logistics;

• Improved communications, particularly through e-business;

• Organizations focusing on core activities and outsourcing logistics to third parties;

• Growing concern about environmental damage, and changing attitudes towards

pollution, waste, traffic congestion, road building, etc;


03
AI and Automation
• What it is:
o AI and automation utilize machine learning, robotics, and data analytics to
streamline supply chain operations, reduce costs, and improve forecasting accuracy.
• How it's changing supply chains:
o AI improves demand forecasting and predictive maintenance, while automation
reduces human error and speeds up operations.
• Real-World Example:
o Amazon uses robots for warehouse operations and AI-driven systems for inventory
management, reducing lead times and optimizing stock levels.
04 Sustainability and Circular Supply Chains
• What it is:
o Sustainability focuses on minimizing environmental impact, and circular supply
chains prioritize reusing products and materials.
• How it's changing supply chains:
o Companies are shifting to sustainable sourcing, eco-friendly packaging, and
implementing circular business models where products are reused or recycled
instead of discarded.
• Real-World Example:
o IKEA is focusing on producing products from 100% recycled materials by 2030. Their
Circular Hub encourages customers to return old furniture for recycling or resale.
05
Usage of the Internet of Things (IoT)
• What it is:
o IoT connects physical objects to the internet, allowing real-time data collection and
monitoring to optimize supply chain management.
• How it's changing supply chains:
o IoT provides visibility into asset location, condition, and status, which enhances
decision-making and improves operational efficiency.
• Real-World Example:
o DHL uses IoT sensors to track temperature-sensitive goods, ensuring that
shipments are kept at the proper temperature during transit.
06 Supply Chain as a Service (SCaaS)

• What it is:
o SCaaS involves outsourcing logistics, warehousing, and procurement functions to
third-party providers to streamline operations and reduce overhead costs.
• How it's changing supply chains:
o Companies can scale operations efficiently, reduce costs, and focus on core activities
by outsourcing supply chain functions to specialized third-party providers.
• Real-World Example:
o Flexport is a digital freight forwarder that offers end-to-end supply chain services,
helping companies optimize their global logistics through its platform.
07
Last Mile Delivery Optimization
• What it is:
o Last mile delivery optimization refers to improving the efficiency and cost-
effectiveness of the final leg of the delivery journey from the warehouse to the
customer's doorstep.
• How it's changing supply chains:
o Advanced route optimization software, drones, and autonomous vehicles are being
employed to reduce costs and improve delivery times.
• Real-World Example:
o UPS uses ORION, a route optimization system that calculates the most efficient
delivery routes, resulting in fuel savings and faster delivery times.
02
Integration of supply
chain
09
Integration of Supply Chains

• Definition:
o Supply chain integration involves aligning and coordinating different parts of the
supply chain to streamline operations, reduce costs, and enhance overall efficiency.
• Why it's important:
o Integration leads to smoother, faster operations, better collaboration between
departments, and improved forecasting, all of which mitigate supply chain
vulnerabilities.
10
Types of Integration

1. Internal (Functional) Integration:


o Coordination between internal departments (e.g., procurement, production,
warehousing, and distribution) to ensure smooth operations across the supply chain.
2. External Integration:
o Coordination with external stakeholders such as suppliers, distributors, and logistics
providers.
▪ Vertical Integration: Controlling different stages of the supply chain (e.g., Tesla
acquiring battery production).
▪ Horizontal Integration: Merging with or partnering with businesses at the same
level of the supply chain (e.g., Amazon acquiring Whole Foods for better
distribution of their groceries).
11
Benefits of Integration
• Operational Efficiency:
o Streamlined processes lead to faster response times, reduced costs, and better
resource allocation.
• Improved Risk Management:
o Enhanced communication and collaboration help manage risks through better
forecasting and early detection of potential issues.
• Customer Satisfaction:
o Integrated supply chains improve order accuracy, speed, and reliability, directly
enhancing customer experience.
Barriers To Integration Ways Of Overcoming Them
• Lack of Collaboration: • Foster Collaboration:
Siloed operations and poor communication Build trust and communication through regular
between departments or partners can hinder meetings and collaborative planning.
integration.

• Technological Challenges: • Invest in Technology:


Incompatible systems and software between Implement cloud-based ERP systems or supply
organizations or departments can create chain platforms that enable seamless data
integration barriers. sharing and integration

• Resistance to Change: • Change Management:


Employees or partners may resist adopting new Introduce training programs and phased rollouts
processes or technologies due to concerns over to ease transitions to new systems and
job security or unfamiliarity with new systems. processes.

12
03
Globalization and
Geopolitics
14 Globalization and Geopolitics

• Globalization:
o The trend of increasing interconnectedness of global markets and supply chains
through trade liberalization, multinational corporations, and digital technology.
• Factors promoting globalization:
o lower costs – from moving operations to cheaper locations (e.g. is India and China).
o Lower barriers to trade and advances in transportation technology.
o The spread of digital technology and e-commerce.

• Geopolitics:
o Refers to the influence of global political and economic forces on supply chain
operations, creating new challenges and risks.
Geopolitical Events and 15
Their Impact
1. US-China Trade War:
o Impact: Tariffs disrupted supply chains, particularly in electronics and consumer goods,
forcing companies to reconsider sourcing and manufacturing locations.
o Example: Apple moved part of its production to Vietnam and India to avoid tariffs.
2. Russia-Ukraine Conflict:
o Impact: Energy supply disruptions, particularly gas and oil, caused ripple effects in
European manufacturing and logistics.
o Example: BASF, a German chemical company adjusted its European operations due to
rising energy prices and energy shortages.
3. Brexit:
o Impact: Complicated trade and supply chain processes between the UK and EU,
increasing customs and logistics complexities.
Managing Geopolitical Risks 16

• Diversify Sourcing:

o Reduce reliance on any single region or supplier, and explore alternative


sourcing options.

• Predictive Analytics:

o Leverage AI and data analytics to forecast potential geopolitical risks and


proactively adjust strategies.

• Build Flexibility:

Ensure that contracts, production schedules, and supplier relationships are flexible
enough to handle sudden changes in the political landscape
05 CONCLUSION

• The evolving global business environment presents both opportunities and challenges

for supply chains.


• Businesses must prioritize agility, innovation, and resilience to navigate the complexities
of technological advancements, supply chain integration, and geopolitical risks.

• Future Outlook: Supply chain management will continue to evolve with a focus on
technological adoption, sustainability, and risk mitigation.
THANK YOU
GROUP LIST
SB/PCM/21/0005 SB/PCM/21/0101

SB/PCM/21/0006 SB/PCM/21/0102

SB/PCM/21/0027 SB/PCM/21/0110

SB/PCM/21/0066 SB/PCM/21/0119

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