Nowadays, supply chains are multi-tier, and they often spread across many suppliers and many countries, thus involving many supply chain risks. On the one hand, companies manage to maximize their economic efficiency, but on the other, they sacrifice transparency and the resilience of their supply chains.
Therefore, their supply chains are extremely vulnerable to disruption risks that can negatively affect their businesses.
According to the recent 2020 Annual Risk Report by Resilience360, the supply chain risks for this year are the following:
- Threat of Cyber-attacks
- Changes in Trade Policy
- Increased Economic Sanctions
- Protest and Strikes
- Border Delays
- Climate activism
- New Environmental Regulations
- Territorial Disputes due to New Trade Routes
- Narcotic Smuggling in Container Ships
- Black Swan Events
Effect of coronavirus on supply chain
The coronavirus has had severe effects on supply chains and the economy as a whole. This unprecedented event belongs to the “Black Swan Events” mentioned earlier. Particularly, what characterizes these events is unpredictability and their lasting effects, in this case, on supply chains.
The coronavirus has had a severe impact on business inventories and risk assessment. During this crisis, manufacturers have found out that lean inventory management cannot work under these conditions. For this reason, they started building an inventory of both finished goods and raw materials. The uncertainty of supply chains during COVID-19 highlighted the need for having stock for themselves or their customers.
Besides, this crisis has accelerated the digitalization of businesses and, therefore, innovations. Many businesses have to proceed to unplanned innovations relating to supply chain management for risk mitigation. These innovations allow for in-depth supplier risk assessment, as they shed light on all the levels of a long supply chain. As a result, businesses have accurate information, thus allowing them to make informed decisions.
However, the quick and unplanned digitalization of businesses leaves them vulnerable to cybersecurity risks.
Supply chain risk management in SMEs
If supply chain risks affect large enterprises so much, this effect is even dramatic in the Small and Medium Enterprises (SMEs). With the vast majority of businesses being SMEs, it’s evident that they are a vital component in economic growth.
Nonetheless, studies confirmed that SMEs are unprepared in supply chain risk management or even unaware of it. It is not a surprise as the small size, low capital, and low technological integration characterize SMEs.
The BePrepared Project
In this light, the Institute of Entrepreneurship Development (iED) presents its new implementing project “BePrepared: SMEs: Be prepared for supply chain risks.” We partner with UNIVERSITA DEGLI STUDI DELLA TUSCIA from Italy, UNIVERSIDADE DO MINHO from Portugal, Hochschule RheinMain from Germany, COTEC Portugal Associacao Empresarial para a Inovacao from Portugal, UNIVERSITAET GRAZ from Austria, and with TALLINNA TEHNIKAULIKOOL as coordinator from Estonia.
The “BePrepared” project wants to prepare SMEs, through the development of a VET training program, to learn how to identify and handle supply chain risks. Particularly, this training will mainly focus on young professionals and young entrepreneurs. Finally, this project will be carried out internationally, similar to the transnational networks that supply chains operate on.