Risk Management Blog - ClearRisk

The Manufacturing Supply Chain: Top 10 Risks to Consider

Posted by Kayla Hickey on Fri, May 12, 2017 @ 15:05 PM

 

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The risks that impact the supply chain of manufacturers is continuously growing and changing. The supply chain is vulnerable to countless risks such as supplier relationships, manufacturing processes, shipment of finished products, and many more. When conducting a risk management plan for your business there are many major risk factors to be considered that are completely out of your control.

Below is a list of the top 10 risk factors that impact the supply chain of manufacturers. 

1. U.S. and foreign/supplier concerns and distribution disruptions. An important supplier moving their operations to another country can have a significant impact on the cost of raw materials and production.

2. Federal/State and or local regulations. Daily operations in the supply chain can be impacted by changes in laws and legislation of the state/province that the organization is operating within. Specifically changes in minimum wage laws, or over time regulations.

3. Labor concerns and underfunded pensions. Unionized workplaces can make it difficult to adjust employee contracts when necessary. Specifically when the need to layoff employees is necessary such as slow periods of customer demand, or situations where assets need to be allocated elsewhere.

4. Competition and consolidation in manufacturing. There's a growing concern with mergers and acquisitions of big brands in various industries. This allows them to eliminate competition and create a monopoly making it harder for smaller companies to survive.

5. Commodity/raw material prices. A change in the price of raw materials impacts the cost of production and the cost of goods to customers.

6. General economic conditions. Factors such as inflation decides the rate at which the price of goods and services increases. A decision has to be made on whether to absorb price increases or pass them onto customers.

7. Environmental regulations, laws and liability. It is critical to consider the environmental impact of daily operations. Disposing of waste incorrectly can result in legal action, and costly fines.

8. Threats to international operations and sales. Changes in international trade agreements such as the U.S. pulling out of NAFTA can impact international deals such as importing and exporting.

9. Breaches of technology, security, privacy, theft, computer crime. Breaches in technology security is the biggest growing risk impacting businesses today. Without proper firewalls and technological security crucial information can be released to competitors.

10. Currency risk, including exchange/fluctuation. Changes in exchange rates impacts both the cost of raw materials and production, especially if suppliers and customers are located in foreign countries.

Supply Chain 247 recently released a list of the 25 biggest common risk factors for the manufacturing supply chain. You can read the full list and data from previous years here.

 

 

Topics: supply chain risk management, supply chain risks, Manufacturing, manufacturing supply chain