The HSBC report titled: “Building Resilient Supply Chains Amid an Uncertain Geopolitical Landscape,” in collaboration with Procurement Leaders, a World50 Group Community, provides a roadmap for organisations to rethink their approach to sourcing, identify vulnerabilities and reduce impacts from external shocks like geopolitical tensions or natural disasters.
“An intelligently designed supply chain finance programme can do a lot of heavy lifting in terms of de-risking trading relationships, improving supplier resilience, and providing suppliers with the finance to invest in and develop their businesses,” said Marissa Adams, America’s head of global trade solutions at HSBC.
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It is Adams who suggested that companies follow a four-stage risk assessment and remediation process to plan for uncertainty:
- Take a risk-based approach to sourcing analysis
Rather than reviewing threats by tier, stock-keeping unit or category, focus on those areas in which the organisation is most at risk, or where the biggest dangers lie. Often, these areas will be associated with specific regions or countries.
- Analyse the consequences of supply disruption
Estimating the likelihood of disruption is difficult, but exploring the likely consequences of any disruption is not. Which products or product groups would be impacted? How quickly? For how long? Are any substitutes available? What might the financial consequences be?
- Review the options available to help avoid disruption
What other suppliers exist? Where are they located? Do they offer the same product, i.e., like-for-like? How viable are they in terms of scale, technology maturity, time-to-market, and quality? Do you need to locate one, two, or even more alternative suppliers?
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By GlobalData- Repeat this process as necessary to avoid new and emerging risks
If recent history has taught us anything, it is that the world doesn’t stand still: geopolitical uncertainties arise over time. Your product offerings and supply base evolve. Repeat the exercise as new threats and vulnerabilities emerge.
As COVID-19 demonstrated the fragility of globalised supply chains, building resilience through solutions like supply chain finance has become critical for maintaining operational continuity, the report explained.
The report follows the launch of HSBC’s Global Trade Solutions which aims to help customers navigate disruptions by leveraging the bank’s trade expertise and international network.
