Companies face numerous challenges in today’s business world, where competition extends beyond national borders and is filled with relentless uncertainties. Precise and efficient supply chain management is crucial to ensuring smooth business operations. Therefore, every business prioritizes supply chain risk management to ensure product manufacturing, delivery, and overall business management meet schedules and customer demands. End-to-end supply chain solutions play a vital role in managing every process—from production to delivering products into consumers’ hands efficiently.

The supply chain is significant in international business operations and, therefore, carries risks. Recognizing these risks allows businesses to effectively handle unforeseen events or obstacles that may arise during operations, such as:

These are risks from political instability, global situations, and wars. A prominent example affecting logistics and shipping is the Russia-Ukraine war, which impacted factories using titanium dioxide since Ukraine is a major exporter. When a key exporting country is at war and lacks sufficient production capacity, it inevitably affects the production of goods using titanium dioxide worldwide.

Additionally, this includes maritime shipping bottlenecks, port congestion, warehouse shortages, and changes in regulations and laws of different countries.

These are risks occurring within the organization that can manifest in various forms, such as a shortage of personnel skilled in sourcing quality raw materials for production, quality control issues, a lack of skilled labor in production, cyber-attacks, and inefficient supply chain processes. Such risks can disrupt operations and potentially cause significant damage to the business.

These involve natural disasters like earthquakes, floods, environmental changes, and pandemics like COVID-19, which led to city lockdowns. Such events impact production processes and product deliveries, causing supply chain management issues and subsequent shortages of products and raw materials.

These are economic problems with widespread global impacts, such as inflation, fluctuating market demand, volatile foreign exchange rates increasing raw material import costs, changes in interest rates, and international trade policies—all affecting supply chain management processes.

Global crises have led to shortages of raw materials for production, the inability to produce goods continuously, and issues in product delivery. Comprehensive supply chain risk management can help prevent these problems.

To prevent disruptions in production and delivery processes, businesses must manage supply chain risks in various areas, such as:

Many people might think that the risks that occur and cause widespread global impacts are difficult to control or avoid. However, this doesn’t mean that we cannot manage these risks. The management approaches include:

Example: International wars like the Russia-Ukraine conflict or the Israel-Palestine conflict can cause raw material shortages (e.g., titanium dioxide) and rising oil prices. Planning for demand and sourcing materials from various locations can reduce supply chain risks.

Moreover, if the cost of shipping goods or freight increases significantly due to rising oil prices or war situations, the risk management approach to reducing expenses is to swap to using raw materials within the same region, to substitute long-distance transportation, and to have employees in each locality act as coordinators and managers.

Example: If entrepreneurs need more skilled labor, they can partner with experts like SCG International, which offers end-to-end supply chain services and production consulting. SCG International assisted Shah Cement, Bangladesh’s leading cement manufacturer, by providing knowledge and technology to reduce production costs while maintaining product quality and promoting sustainable long-term growth.

While we cannot prevent natural disasters or pandemics, we can plan and create flexibility to respond effectively:

Example: During the COVID-19 pandemic lockdowns, everything halted, including raw material deliveries, affecting production lines. Accurate advance forecasting, calculating raw material needs, sourcing globally, and utilizing real-time management technology can keep production continuous. Achieving this requires a supply chain network managed by a company with extensive expertise and experience.

Global economic volatility, influenced by major countries’ economic policies and currency fluctuations, directly affects product costs.

Example: When currency or oil prices fluctuate, production costs increase; businesses can manage this by improving integrated logistics processes. For certain products, consider changing from container shipping to bulk cargo. This requires suppliers to be highly flexible, such as adjusting packaging for bulk shipping and calculating maximum stacking levels to prevent damage, optimizing space, and reducing transportation costs.

SCG International, a leader in global supply chain management services with over 45 years of experience, deeply understands various industries and assists partners in the following ways:

In an environment filled with uncertainties and numerous risks, choosing services from SCG International, an end-to-end supply chain service provider, can help the management of supply chain risks, enhance operational efficiency, reduce production costs, and effectively increase competitive advantages in the global market.

If you’re seeking a partner to elevate your business and support your success both domestically and globally, we offer supply chain risk management solutions to help your business grow sustainably. Contact us today to receive advice from our experts.