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88% Say They Are Concerned About World Events Impacting the U.S. Supply Chain in 2024

88% Say They Are Concerned About World Events Impacting the U.S. Supply Chain in 2024

Supply chain disruption was listed by participants as one of the primary concerns and growth limiting factors in both the UHY 2023 Middle Market Survey and the 2024 Middle Market Survey. Supply chains have seen slight improvements to close 2023 into Q1 2024, but many risk factors still exist. Modern supply chain management is constantly evolving, presenting new opportunities and cost savings while also bringing unavoidable risks that exist in many forms. The key to a resilient supply chain is managing risks and preparing for potential hazards to protect your business operations and reputation. More than 85 percent of the attendees of our 2024 Middle Market Survey Webinar showed concern about global events impacting their supply chain.

Understanding the risks present in your business landscape is a key component of an effective supply chain management strategy. These are the most prevalent risks to your business’s supply chain for 2024 and steps you can take to minimize your exposure.

Increase in cyber-attacks

The increased prevalence of cyberattacks on a global scale is a recurring theme in the era of the digital boom and is one of the most significant supply chain risks for businesses. Any organization with access to your company’s network or systems can pose a risk. The 2023 Cybercrimes Report by Cyberventures states that cybercrimes will cost companies across the globe an estimated $26 billion per day in 2024. With the expanded adoption of new technology and increasing connectivity comes the inevitable opportunity for emerging cyber threats and vulnerabilities. Supply chains are subject to those same risks.

Cybercriminals aggressively refine their extortion strategies, and these threats are becoming extremely complex and sophisticated. A critical step to mitigating risk and improving protection is understanding vulnerabilities. Review your business’s information systems, starting with user access and the information being shared. Evaluate these processes for potential vulnerabilities and take appropriate action. Employee training is extremely effective at preventing social engineering scams and phishing attempts and is considered a first line of defense against these attacks.

Rising geopolitical tensions and ongoing conflicts

The geopolitical landscape is fraught with tension, deteriorating political relationships, elections, and ongoing conflicts, any one of which could cause major supply chain disruption. Some examples of geopolitical risks in 2024 are deglobalization, strategic competition and posturing between the U.S. and China, and rising tensions between Russia and NATO amid the ongoing conflict in Ukraine. As these conditions continue to develop and new risks arise, your supply chain will have to adapt and pivot to avoid prolonged disruption.

Diversification of suppliers and extensive planning will be two of the most effective strategies against geopolitical risks. Businesses should seek both onshore and offshore supply alternatives to have options in case any one event threatens their supply chain. If utilizing many offshore supply sources, analyze where they are based and determine which domestic and international risks may impact your supply chain.

Minimizing your risk and maximizing value

While it is not possible to plan for every potential unexpected event, there are steps you can take to minimize your risk, while maximizing the efficiency and value of your business. In our experience, two critical components of a successful supply chain strategy are your sales and operations planning process and purchasing strategy. A disciplined and cross-functional sales and operations planning process will align your information flows and value streams between you, your customers, and your suppliers. This reduces the variability in your ordering and manufacturing processes while identifying critical areas of focus for schedule and inventory management. Robust and proactive purchasing strategies built on the priorities of your business will complement the sales and operations planning process.

These strategies not only provide you with confidence that you have adequate supplier capacity and value streams in place but also help you achieve an optimal level of total cost while minimizing your risk. When done well, the dual focus on sales and operations planning and purchasing strategy will result in significant financial improvement and stability in your business.

The supply chain professionals at UHY are specialists and can help you implement and integrate leading practices in these areas. Fill out the form on this page to speak with a member of our Sales and Operations Practice.

 

03/13/2024

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