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Many large distribution centers are now being designed with a much greater degree of flexibility in their use so that changes in product profiles and demand patterns can be more easily accommodated, he says.

For Greg Duncan, Client Service Manager at FM Global Australia, the need to update the risks in the supply chain due to changes in the business environment was an important lesson.

“When you have a particularly complicated supply chain, the risk changes all the time,” he says.

In addition to the risks inherent in each individual supplier, FM Global recommends that companies consider several risk factors when considering the resilience of their supply chain: how risky it is to do business in a particular country, including political risk and the risk of corruption, the quality of its infrastructure and how prone it is to natural disasters.

FM Global publishes the annual FM Global Resilience Index, which compares risk factors in more than 130 different countries.

“When companies are making decisions about where to either do business directly or where to do business as part of their supply chain, they are equipped with information to make better decisions about what they are going to give you are the best result, when it comes to risk, ”says Duncan.

In general, Australian companies have handled the supply chain disruptions from COVID-19 well, having worked their way through similar disruptions like the earthquake in Japan and the Fukushima nuclear reactor failure in 2011, Duncan says.

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Good supply chain risk management is about understanding where different risks lie and taking steps to ensure that those risks are proactively mitigated as much as possible. This does not always come at a cost.

“An example would be if I have a supplier in Thailand that makes a certain widget and I understand that that supplier is exposed, that I have a strategy, but when that supplier is down, I can move on to something else. The dual source supply or the alternate supply would be a typical example of what that looks like, ”says Duncan.

Another would be inventory management. Holding inventory comes with working capital and logistics costs, but that needs to be balanced against providing a buffer against disruption from a large supplier, says Duncan.

While there have been suggestions that companies bring production back onshore after the coronavirus supply chain disruptions, Duncan warns of jerky reactions. A factory in Australia or New Zealand could just as easily suffer supply chain disruptions as one in Wuhan, he says.

“It doesn’t really matter where your supply comes from. You just need to understand what the risks are and then take the right steps to manage those risks. So when there is a disruption, the impact on your business is minimized, ”he says.

In a business impact analysis, companies assess their exposure to specific suppliers and specific regions so that they understand both the likelihood of something going wrong and the consequences if it does.

According to O’Byrne, the visibility of supply chain information remains an area of ​​weakness for many organizations. “The ability to see in real time where incoming products are, how sales are being tracked, where local inventory is being provided, and accurate cost management are more important than ever. System upgrades and a greater reliance on AI tools are therefore inevitable, ”he says.

“On the positive side, supply chain managers and their teams have really been on the rise over the past 12 months and have come up with some amazing solutions in a short amount of time – pop-up warehouses and collaboration on transportation are examples,” he says.