Extreme Weather Forces Businesses to Factor in Supply Chain Resilience
Businesses which depend on far-flung supply chains must assess up front the adaptability of a source or manufacturing country’s infrastructure, especially in an age of extreme weather events, according the latest edition of an annual resilience report.
While Switzerland ranked at the top of the 2018 FM Global Resilience Index for the sixth year in a row, it is the high marks received by the eastern seaboard of the United States that really drive home the point, Supply Chain Dive reports, with the Northeast scoring 89 out of 100 for resilience despite being knocked flat by serial hurricanes. Although the region’s supply chains and, therefore, its businesses were devastated by the storms, its in-built resilience “produced relatively quick results and rebuilding, getting businesses back up and running.”
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But that level of resilience just isn’t part of the picture elsewhere in the world, the industry newsletter notes. A risk management strategy for Asia, for example, would need to be “especially interested in infrastructure,” said Ronnie Gibson, vice president of innovation at FM Global.
Anyone with supply chains in Taiwan and/or the Philippines, he added, should know that while both are significantly exposed to hazards like typhoons, the two countries differ “drastically” in the quality of their infrastructure. Where “Taiwan ranks 22 out of 130 countries for infrastructure quality,” Gibson said, “the Philippines ranks 109”. Taiwan’s likely ability to rebound far more quickly from disaster “could be a factor in making sourcing decisions.”
Even so, poor supply chain resilience may not always be a deal-breaker. For a “rare and critical product,” like a species of plant indispensable to the pharmaceutical industry, “there may not be an alternative,” he said. Such is the case with Venezuela, which remains a key supplier for drug companies, despite its consistent low ranking on the FM Global Index, Supply Chain Dive states.
“A low-ranking country doesn’t mean you don’t go there,” Gibson said. “Just go there with your eyes open.”