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The China Syndrome. What You Don’t Know Could Hurt You - Soon.

March 1st, 2007 · by Tim Minahan · 2 Comments · LCCS and trade, supply management, supply risk

In recent months, Supply Excellence contributors and readers have cited a growing concern over currency, diplomatic, and wage inflation risks in China. A new study from Aon and Oxford Analytica adds two new risks for those sourcing from China: increasing supplier insolvency and another SARS outbreak.

Aon and Oxford Analytica have creatively consolidated their global supply risk assessment into a useful map that highlights regions at risk for supply disruptions as well as the likely risk factor. For example, the map flags increased political risk in Latin America, just as U.S. diplomats are pushing free-trade agreements with those regions.

The most alarming predictions portend supply disruptions in key sourcing hotspots in Asia. In addition to China, the map fingers South Korea, the Phillipines, Vietnam, Indonesia, India, and Cambodia as areas at risk of near-term supply disruptions. I have compiled the near-term regional risks into the below table. (However, I encourage you to download Aon and Oxford Analytica’s risk map for yourself.)

Click picture to enlarge:

Top Supply Risk Countries table.jpg

While a handy reference, the map only offers a one-sided the-sky-is-falling view of global supply risk. For recommendations on how your company can assess and mitigate supply risks, I recommend you read the growing collection of research from Mark Hillman, AMR Research’s supply risk guru.

In a recent SupplyNow podcast, Mark reveals the top areas of supply risk and how to monitor and protect against them. For example, he reports that one-third of companies have dedicated line-item budgets for supply risk management, and that 54% expect spending on resources and technology to monitor and manage risks will increase this year. Mark’s interview is a must hear for any executive trying to assess how best to assess and control supply risk. (You can download the podcast here.)

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2 responses so far ↓

  • 1 Supply Excellence » What’s Your Supply Risk Quotient? // Mar 2, 2007 at 7:57 am

    [...] The China Syndrome. What You Don’t Know Could Hurt You - Soon. March 2, 2007 What’s Your Supply Risk Quotient? by Tim Minahan at 6:30am [...]

  • 2 Supply Excellence » Supplier Performance Management: Industry’s Big Farce // Apr 7, 2007 at 8:44 am

    [...] While much of the report holds up LCCS as the poster child for heightened supply risk (and as fodder for why supplier performance management is so critical today), other widely accepted supply management best practices — such as outsourcing, supply base rationalization, and lean and just-in-time (JIT) — have made enterprises more vulnerable to supply disruptions than ever before. (Not to mention elevated political, economic, and natural disaster risks around the globe.) [...]

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