May 22, 2019 Unpacking Supply Chain Upheaval

Shifts to global supply chains driven by new threats and change may have sweeping consequences for business continuity and cargo security.

May 22, 2019

By Jim Yarbrough, BSI Global Intelligence Program Manager   

So much has happened recently to endanger supply chains that it’s difficult for those of us close to the industry to determine which global trend may pose the greatest threat. Whether you look at looming cybersecurity issues, the overhaul of Minimum Security Criteria under the U.S. Border Protection’s Customs-Trade Partnership Against Terrorism (CTPAT) or political uncertainty erupting from the U.S.-China trade dispute, new leadership in Brazil and Mexico or Brexit, global supply chains are undergoing some major rethinking.

The concern is that as supply chains change — with Chinese companies moving operations to Africa, for example, or the U.S. sourcing goods from other Southeast Asian nations to avoid retaliatory Chinese tariffs — major implications also emerge. These shifts may have sweeping consequences for business continuity and cargo security.

One way to make sense of it all is to review our  latest SCREEN, or Supply Chain Risk Exposure Evaluation Network, report for 2019. In this latest annual “Supply Chain Risk Insights” assessment, we at BSI, a business improvement company, outline best practices for countering and managing the new risk landscape in the industry.

Let’s take a closer look at the top supply chain challenges and trends for the year ahead:

CTPAT Certification Shakeup

In the United States, companies enjoying nearly unchanged trade benefits under CTPAT for almost two decades soon will need to meet new criteria for certification that reflect today’s emerging operations risks. As the revised criteria are unveiled, companies will need new effort to achieve supply chain security and surfacing mitigate risks.

U.S.-China Feud Reverberations

The intensifying trade dispute between mega-markets China and the United States raises an array of fresh concerns but among them, steps to protect against U.S. intellectual property theft and the potential relocation of Asian facilities by a diverse set of businesses stand out. As companies weigh transitions in their Asian supply chains to lessen exposure to China and its rising tariffs, they need to be mindful of the potential cost of increased risks prevalent in Southeast Asia related to possible child labor, forced labor or natural disasters.

Migration Still Matters

As conflict, political and economic conditions continue to drive mass migration, our 2019 SCREEN report reminds supply chain professionals that security and corporate social responsibility risks remain inherent dangers of managing it. This year’s report notes an increase in stowaway and labor exploitation risks stemming from migrants traveling along three major routes: Central to North America, intra-Southeast Asia, and Africa and the Middle East to Europe.

Impact of Political Drama

Recent jarring shifts in political ideology in Brazil, Mexico, the United Kingdom, India and the United States have set the stage for an eventful 2019.

Beyond U.S.-China tariff wars, newly elected leadership in Brazil and Mexico promises a new course in Latin America . In Brazil, BSI recommends that companies take a more active due diligence role on business partnerships to fill gaps left by the government’s removal of some regulatory requirements. In the case of Mexico, we expect security challenges to keep plaguing shipping, in particular in-transit cargo theft, despite President Obrador’s moves to curtail corruption.

Tradeoffs in Africa

Our report also discloses the potential for more movement of supply chains to Africa, particular among companies based in China but suffering from the U.S.-China trade dispute. As with manufacturing shifts to Southeast Asia, transferring supply chain operations to Africa could save on labor and shipping costs to Europe and the United States.

But the impact of the relatively unchecked threat of terrorism in African countries — where we note 23 percent of all supply chain terror incidents occur — sets the operational environment there apart from Asia’s. This risk, coupled with corruption, must be taken into account in any consideration of supply chain moves.

Hacking Hazards

Finally, cybersecurity stands firm as a continuing, multifaceted struggle for everyone along the supply chain. Securing data and facilities in a fast-changing world connected by the Internet of Things is a daunting challenge that isn’t going away any time soon. Our report elaborates on that reality with some practical recommendations.

As we know, supply chains’ technical stability sits at the nexus of physical network and device security, cybersecurity and human factors. It’s important to acknowledge this can be particularly tough for supply chain managers to control as they worry about their own and partners’ vulnerabilities.

Conclusion

Regardless of how these trends affect your business or supply chain, it’s clear they are persistent. I hope you can use the intelligence available in our 2019 SCREEN report to incorporate effective ideas that make your supply chain and business more resilient against risks.

Jim Yarbrough, BSI Global Intelligence Program Manager

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