The risks right under our noses

Ransomware is on the rise, inflation is making economists nervous, the delta variant is threatening to undo pandemic progress, and smoke from forest fires in Western states is blanketing the nation. And did I mention we haven’t had any major storms this hurricane season … yet?

Although those threats are looming, the economy is booming. The National Retail Federation (NRF) recently noted that U.S. gross domestic product (GDP) surpassed its pre-crisis peak during the second quarter and that vigorous growth was expected through the rest of the year.

And yet … those flashing signs are making supply chain professionals nervous, adding to their apprehension at a time when they’re already fretting about freight capacity shortages and epic seaport congestion.

To lessen the risk of further disruption, the analyst firm Gartner Inc. recently advised chief supply chain officers (CSCOs) to reduce their “surface area,” which is the sum of all the products, processes, and networks that compose the supply chain. “With a higher cadence of risk event, a smaller surface area is an asset, a large surface a major liability. CSCOs can’t control how many risk events will happen, but they can control the size of the target they want their organization to be,” Suzie Petrusic, director of research with the Gartner supply chain practice, said in a release.

Gartner went on to note that companies can cut their exposure to risk by limiting their supply chain “touchpoints”—whether it be third-party logistics service providers (3PLs) or shipping modes and lanes—and by controlling the distances between suppliers, factories, warehouses, and DCs.

The Biden administration also shined a spotlight on risk in February when it issued its Executive Order on America’s Supply Chains, which called for a federal review of vulnerabilities in the supply chains for four types of critical products: semiconductors, large-capacity batteries, pharmaceuticals, and strategic minerals and materials.

Less than two months after the order was issued, supply chain software firm Descartes Systems Group announced that it had used its global trade intelligence solution to assess sourcing risks for those critical supply chains. “The pandemic has highlighted the economic risks associated with highly concentrated supply chains and trade flow disruptions,” Chris Jones, executive vice president at Descartes, said in a release. “While the Biden Executive Order points to a number of critical supply chains with sourcing challenges …, this directive is a wakeup call for all U.S. manufacturers to assess the sourcing risks inherent in their current supply chains and develop alternative sourcing strategies for greater resiliency.”

Both experts offer sound advice, but in this digital age, even the most basic operation is vulnerable to outside disruptions. For a prime example, just look at this article. Assembling a story like this relies on layers of programs and apps, stretching from laptops to the cloud. We’re a streamlined operation, but disruption can strike from any angle.

Not long ago, this magazine stumbled up against some of those disruptions, but the cause was nothing so grand as ransomware or global economic forces. Rather, our email servers went glitchy for a week or two. Then our website vendor delivered a software “upgrade” that upgraded nothing but our blood pressure. And finally, our workflow management platform went offline, sending us scurrying for new ways to collaborate—phone calls? the U.S. mail? the Pony Express?

These were three simple hiccups that could happen to any business, no matter the size of its surface area. In the end, we never missed a deadline, thanks to creative thinking, dedicated colleagues, and maybe a few extra aspirin for the stress headaches. But the experience showed that risk exists everywhere you look, from boldfaced headlines to basic business tools. As the world stumbles toward a post-pandemic “new normal,” resilient organizations will have to keep a watchful eye on all threats, great and small.