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Current affairs


shipping traffic, causing multiple chemical and steel makers to declare force majeure, to the growing number of choreographed incidences of cargo thefts carried out by criminal gangs across Europe, North and Latin America. The chemicals industry has been particularly affected, mainly by thieves targeting polyethylene. A situation closer to home in 2018 saw one of the UK’s most recognisable brands suffer an embarrassing failure in its logistics management (see case study on p48). Football fans looking to celebrate the national team’s run to the World Cup semi finals were affected by a chronic shortage of carbon dioxide, which is widely used to package food and provide the fizz in beer and soft drinks. Heineken, the brewer, was left with no option but to contact pubs, asking them not to place large orders for some of its beers, as the brewer was having to rely on emergency reserves of carbon dioxide. Finally, a few weeks ago when watching the local news, I saw an interview with Matthias Meyer, managing director of Heller, a company manufacturing machine tools based in Redditch, Worcestershire. In this interview, Mr Meyer was explaining how the Brexit impasse was impacting on the delivery of core components, with lengthy delays at UK ports affecting their production capacity.


Understanding the risks


Whilst supply chain disruption is often part and parcel of doing business, it is becoming an increasingly significant area of risk and is beginning to demand boardroom attention. Many companies are now reporting on supply chain risks and their exposures in publicly filed accounts, and disruptions, or risks of failure, are turning into board level issues. A study by Allianz, one of Europe’s largest insurers, ranked supply chain disruption first in its top ten global business risks for 20193


. So why is supply chain disruption on


the increase? Is it simply a consequence of this interconnected world in which we live and trade? To establish the level of risk facing businesses, it is important to understand exactly what is meant by ‘the supply chain’. Many definitions exist, but put simply a supply chain is ‘the system, process and activities of sourcing raw materials or components an enterprise needs to create a product or service, and to deliver that product or service to customers’. Immediately, it becomes clearer why


supply chain risks are so prevalent, and why businesses of all types and sizes are experiencing interruptions on a much too frequent basis. For instance, if your business is reliant on sourcing raw materials, which is often highly globalised, you are vulnerable


FOCUS


www.frmjournal.com MAY 2019


47


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