Like one-hundred-year floods , Black Swan events , a term used to describe unforeseen occurrences with a severe impact , have become increasingly common with consequences for global supply chains . Covid and Russia ’ s invasion of Ukraine are two such events that derailed the global movement of goods and parts for finished products , affecting a wide range of manufacturers and distributors . Now , the threat of a US freight railway worker strike and heated tensions over Taiwan are two more ‘ outlier ’ events that should remind business leaders to regularly anticipate , and plan for any unforeseen disruptions to the global supply chain .
Key to resiliency is de-risking and diversifying
A conflict with the People ’ s Republic of China over Taiwan or a strike by US freight railroad workers each brings with it its own permutations of challenges , but a key to resiliency in a supply chain is de-risking and diversifying by building a broad pool of suppliers across geographic regions . Managers should now view the supply chain as one with many hidden fault lines where there never is zero risk of disruption . For many manufacturers , changes in the geopolitical landscape and other factors may spur a push to find suppliers closer to where a final product is produced – a refinery or assembly plant . Also , manufacturers may forgo low-cost suppliers for sources that safely assure uninterrupted delivery of essential parts and raw materials . A conflict over Taiwan is sure to impact global trade , disrupting supply chains . Published reports offer varying theories on how China may try to seize the island nation , with some analysts suggesting that Taiwan ’ s ports could be blockaded and undersea communications links could be severed . Any conflict would impact the shipping of goods from Taiwan and nearby markets via sea or air . Goods and raw materials sourced from the entire region are diverse , but Taiwan is home to more than 90 percent of the manufacturing capacity for the world ’ s most advanced semiconductors , a critical building block of modern industrial economies .
Meanwhile , the implications of a disruption to US rail traffic are evident when considering weekly data measuring goods delivered by rail : each week , nearly half a million carloads and intermodal units move motor vehicles and parts , nonmetallic minerals , farm products , grains , chemicals and metals .
Conduct top-down review of all aspects of production to map out vulnerabilities
Managing geopolitical risk now means that companies should not rely on a particular supplier or a region and watch for political flashpoints that could disrupt supplies . If you rely on one primary supplier for 80 percent of your goods and 20 percent from a secondary source , you may want to change that mix . While maintaining strategic alliances with suppliers is important , if you want to de-risk and build a resilient supply chain going all-in with one supplier may no longer be feasible . For some businesses , adopting this strategy may be easier said than done . Within healthcare , for example , you can readily shift sources of masks or syringes , but the pivot to a new supplier of Magnetic Resonance Imaging machines may be tougher because of their size and weight . Sometimes , weaning yourself off a region and its suppliers – for example ,
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