Experts brought together by the Exporters and Investors Club and AON have said that the risks associated with global supply chains will take months to dissipate and have advised companies to thoroughly update their supplier assessments and redefine their internal processes to mitigate them.
According to a global survey conducted by AON, supply chain contingencies are now considered the eighth biggest concern for companies, with supply chain disruption climbing to second place as an emerging risk.
The participants in the meeting entitled "Integrated Supply Chain Risk Management", held in Madrid, were Reyes Fuentes, Director of Global Risk and Audit at INDRA; Nannette Wong, Director of Transport and Logistics at AON; and Miguel Ángel Macías, Director of Risk and Insurance at GESTAMP.
All three agreed that we are facing a risk that is here to stay for a period of time that is still difficult to determine, as new factors of uncertainty are looming on the horizon. In their opinion, it has never been thought that transport in the field of international trade could be impacted as it is now.
"In the past, countries prioritised placing their production and purchases in cheaper countries, and today the priority is to maintain continuity in production," said Nannette Wong, AON's Director of Transport and Logistics.
In this respect, Indra's Reyes Fuentes pointed out that the underlying cause of the tensions in supply chains is the dependence of world industrialists on China, and that this will force a reordering of globalisation, although changes cannot be expected in the short term.
Reyes Fuentes also pointed out that "although supplier management risks have always been there, the current situation is exceptional", and indicated that the current trend is to "seek an efficient supply chain, without paying as much attention to cost as has been the case until now".
Reyes Fuentes pointed to three blocks of measures that companies could implement to mitigate supply chain risks. Firstly, "carry out an exhaustive analysis of the supplier map"; secondly, design plans aimed at changing internal processes. "For example, it would mean moving from just-in-time to just-in-case, which would mean putting the cost of procurement on the back burner and bringing the need to increase stock levels to the forefront," he said. And, finally, it would be a question of "implementing ad hoc plans depending on the type of industry or type of supplier".
For his part, Miguel Ángel Macías, from GESTAMP, indicated that the most appropriate thing to do is to "analyse the risk and decide whether it should be managed by the company itself or transferred". Macías also pointed to digitalisation as a possible solution for companies: "The digitalisation of production could help to improve these processes", he stressed.
Nannette Wong, from AON, also emphasised the problems that companies may encounter in the insurance market in order to transfer the risk, due to the fact that, in the current context, "we would not be talking about the deterioration of the goods, but about the delay in their reception".
Faced with this challenge, Miguel Ángel Macías, from Gestamp, recommended as an alternative to manage the risk internally, and if necessary, to have the help of a specialised consultancy. Added to this situation is the adverse fact that the insurance market is getting tougher, and coverage is becoming increasingly more expensive.
The three experts recommended companies to be aware of the current risk in supply chains and advised them, whenever possible, to redefine internal processes to mitigate it. "Faced with such a complex scenario, transfers are a response to risk, but it is also necessary to have internal control by reinforcing surveillance systems," said Reyes Fuentes.
The conference was also attended by Antonio Bonet, president of the Spanish Exporters and Investors Club, who introduced and closed the event, and Carlos Bereciartua, director of AON Global Risk Consulting, who moderated the panel discussion.