Supply Chain Security

1. Domestic & Regulatory

• Industry-specific shifts within countries, i.e. serialization rules for medicines
• Electronic device mandate for the U.S. trucking industry
• Shifts in tax regimes, as seen in the U.S., India and Australia
• Layers of regulatory compliance

Example: The Electronic Logging Device (ELD) Mandate requires the use of an ELD to automatically record a truck’s driving time to more accurately monitor a driver’s hours of service to reduce the risk of crashes and chronic health conditions connected with lack of sleep. Any unexpected delays can put a driver over the 11-hour driving limit per day. Exceed it and they face strict penalties.

2.  Political and International Policy

• Shifts in a country’s stance toward imports and exports
• Participation (or lack of) in existing international institutions
• America’s focus on Buy American policies
• Global trade and tariff disputes
• Political and civil unrest

Example: In July 2018, the US implemented a first round of tariffs on $34 billion of imports from China.  China retaliated with tariffs on an equivalent amount of imports from the United States. Because of this disruption, China and the US could lose income of up to 3.5% ($426 billion) and 1.6% ($313 billion), respectively.

3. Cataclysmic

• The United Kingdom’s Brexit vote to leave the European Union
• Venezuela’s descent into chaos and its impact on the world’s oil market
• The political policies of heads of state, such as Rodrigo Duterte in the Philippines, can cast shade on a country’s business environment

Example: Because of Brexit, orders from EU-based companies are expected to take a dramatic decline.  “83% of British manufacturers are actively forging new relationships with ‘Rest of World’ territories, a move that will place new demands on supply chain networks and logistics providers…”

4. Manmade

• Product adulteration, defects and recalls
• Cyber attacks, e.g. malware and distributed denial of service
• Labor and civil unrest
• Terrorism
• Piracy

Example:  In September 2017, Citrix confirmed that several builds of Citrix NetScaler ADC and Citrix Gateway Management Interface contained authentication bypass vulnerabilities.

A recent report from CrowdStrike suggests that cybercriminals are increasingly circumventing defenses and finding weak links to exploit via supply chain attacks.

5. Economic

• Bankruptcies
• Mergers and acquisitions
• Failure to perform by third-party trade partners

Example: The 2017 Hanjin maritime bankruptcy was the largest in container shipping history.  The supply chain disruption that ensued left workers, 96 ships, containers and onboard cargo worth $14 billion stranded at sea and in ports all around the world.

6. Natural Catastrophes

• Hurricanes
• Earthquakes
• Floods
• Wildfires

Example: The Tohoku earthquake and tsunami in 2011 cost Japan an estimated $210 billion. The quake created a domino effect that shook supply chains all over the world. “Companies dependent on Japan’s ‘Just In Time’ delivery practices were left without parts as electronics and auto manufacturing plants were destroyed. Global production suffered, affecting other nations’ economies.”