Risk Mitigation in the Global Supply Chain

Made in America. Made in Japan. Made in China.

These are the phrases every one of us has become accustomed to seeing stamped on the bottom of our consumer products, and while they are statements easy to take at face value, the global supply chain that manufacturers now operate in has rendered those implications virtually meaningless.

When discussing iPhone production on MSNBC, Apple CEO Tim Cook discussed how our traditional perception on where products are made has become outdated. “It’s not true that the iPhone is not made in the United States,” he said. “We have always made the parts here. People just look at where the final product is assembled.” Apple products, while having roots in American innovation, are much more accurately described as a “global” product.

“With the degree of outsourcing of platforms and parts, the supply chain is much more dependent on the global network,” writes Supply Chain Insights Founder Lora Cecere for Forbes. “Increasingly, it is very hard to define where a product is manufactured.”

A global supply chain, however, is only as successful as the risk mitigation practices its participants have in place to ensure that critical inventory is available at the point of assembly independent of outside variables. And every country has variables — even the United States, where risk today takes the form of nationalist policies originating, in part, from fear of displacing the American workforce through outsourcing and (eventually) full automation. These fears, it must be said, are certainly not unfounded.

Taking politics out of the discussion as much as possible, it’s beyond debate that such economic uncertainty has raised the stakes higher than the manufacturing industry has ever seen. After nearly half a century of working toward a borderless, transparent global supply chain network in the name of consumer benefit, the prospect of reverting back to a more traditional, closed “made and manufactured” model in certain markets has been a significant cause for concern. The only cost-effective solution for many manufacturers is to aggregate component manufacturing and storage in high-risk locales currently unequipped to and unprepared to maintain the transparency a global supply chain requires.

We are already seeing some of the effects of this movement. “Today, eight out of ten companies do not know where their second and third tier supply is sourced,” writes Cecere. “Only 15% have active supplier development programs that can respond—teams that know the sourcing locations and are able to go into crisis and help suppliers — in the case of supply chain disruption.” It doesn’t take an industry expert to see that these trends lead somewhere no manufacturer wants to go.

The industry is not blind to the issue. According to analyst Steve Culp, 80% of manufacturers see the protection of supply chains as a current and future priority. “Natural disasters and extreme weather conditions are not the only threats to supply chains,” he writes. “Systemic vulnerabilities, such as oil dependence and information fragmentation, also pose serious risks, as do political unrest, cyber crime and the rising cost of insurance and trade finance.”

It is in response to a marketplace trying to juggle all of these fears and variables that EDX has created our Critical Inventory Solution. In addition to our ISO 9001 processes certified by TÜV SÜD America, we are the only supply chain partner capable of guaranteeing business continuity as it relates to sensitive, irreplaceable electronic components. We achieve this through the use of the supply chain industry’s only custom storage vault, which is rated “best in class” for electronic component and raw material storage. Natural disasters such as fire, earthquakes, or electrostatic interference through lightning are rendered moot when locked within our vault’s unique structural design tested to be three times the strength of a normal building. For more information on our vault’s features, as well as our industry-leading die and wafer banking capabilities, just click here.

Every hindrance to progress throughout our history has been rife with obstacles, but for each, we have adapted, and the global supply chain is no different. Manufacturers know what forms risk is taking in today’s supply chain — the question is how, and when, they choose to respond. That remains to be seen.

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