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During May, India announced its wheat export ban after a season of exceptional hot weather affected their crop sending domestic prices soaring. The India Commerce Minister, Piyush Goyal defended the ban by insisting that India wasn’t a major wheat exporter and therefore global markets shouldn’t be affected. On the other hand, this export ban increased the benchmark wheat index as much as 5.9%, the highest it had been in several months.
Agriculture ministers from the G7 have criticised the decision stating “If everyone starts to impose export restrictions or to close markets, that would worsen the crisis”
More countries are banning exports of essential ingredients and supply chain risk management and food safety is a critical and growing concern in today’s environment.
Private and public sector organisations need to understand the challenges they’re actively facing and the potential solutions available to them in the wake of global food shortages.
Looking at your suppliers and analysing them from a different perspective will mitigate those risks a good starting point is to profile your current suppliers.
Reputation of your suppliers
- What do you know about your suppliers?
- Longevity of your suppliers?
- Are they recommended by others?
- Have your interactions with your suppliers been positive?
- Are you tracking relevant news sources in real time?
Location of your Suppliers & their Supply Chain
- Where are your suppliers located?
- Do you know the critical manufacturing or service sites?
- Do you know the critical locations and associated risk of your supply chain??
Criticality of your Suppliers
- How important are your suppliers to your business?
- Have you ranked your suppliers and do you relevant strategies depending upon their risk and importance?
- For your Tier 1 and 2 suppliers do you have alternative supply arrangements in place??
- In the event of a major disruption have you mapped out the implications and timescales to commission alternative supply arrangements?
What are the risks involved in your Supply Chain?
The depth and breadth of risk management will be very different depending upon your circumstances, but some areas to consider include:
- Shipping disruptions – in March 2021 the Suez Canal was blocked for six days after a grounding. This contributed to rise in prices and knock-on delays.
- Delays at the border – through Covid and Brexit there have been reported delays at borders due to additional imports and bureaucracy.
- Climate change – natural disasters/black swan events such as storms, earthquakes, wild fires or just the increased risk to normal production through continual disruptiong. lack of water resources, or increased weather volatility.
- Politics and world events – China and US trade relationships have cast a shadow over chip shortages and has impacted farmers to produce food. Ukraine and Russian conflict has further exacerbated the food crisis with Ukraine unable to export wheat.
- Modern Slavery – Forced labour in supply chains remains widespread, examining your supply chain for signs of modern slavery to eradicate it, is critical as at least 24.9 million people are thought to be trapped in forced labour worldwide.
- Cyber Attacks & Data Breaches – Cyber attacks are no longer just an IT department issue. Cyber attacks on supply chain continuity, transport security require a co-ordinated response. Farm equipment is vulnerable to cyber attacks, leaving global supply chains exposed to risk.
- Liquidation & Insolvency – Suppliers that threaten your financial health through their own insolvency and market volatility. In 2016, a South Korean container carrier, one of the top ten who transported 3.7 million containers a year suffered a financial breakdown and ships were seized.
- Commodity Price Fluctuations – Oil price increases have caused strikes in South Korea by truck drivers causing deliveries of raw materials for semiconductors and petrochemical products to be delayed.
- Covid-19 – The ripple effect from the Covid-19 pandemic has seen companies struggling with supply chain disruption.
Identifying your supply chain risks and understanding how to mitigate them, working with trusted suppliers and having plans in place for when your supply chain fails are fundamental requirements for all organisations. It requires a clear understanding of your supply chain, real time data, transparency of performance and potential risks, excellent communication and most of all an environment of trust and collaboration.
Those organisations with constructive and collaborative supplier relationships will be able to manage and respond to risks faster and more effectively than those that have not invested in understanding their supply chain and built positive relationships.
