Scariest Supply Chain Risk: Mission-Critical Supplier Going Bust

The Scream, by Edvard Munch (1893)Supply chain disruption is new Nightmare on Lime Street. Some ex-colleagues of mine in the aerospace/defense and pharmaceutical sectors still seem ignorant as to what this actually means and how it could affect them. Their order books are full, their products are leaving their sites on time, to quality and within budget, and buffer stocks seem to be in place. Then one day they hear about a small supplier going bust. The usual reaction is “Oh, it’s only a small supplier, why should we be affected?” Well, it could just happen that the supplier in question provided a unique component or product that was used right across their product portfolio. Buffer stocks were kept to a minimum due to the Just in Time strategy that had been adopted and suddenly all production across all sites grinds to a halt!

This post was part of the special feature about Our Scariest Risks, published October 31, 2011. The feature also included these other risks:
Aerospace
Captive Insurance
China
D&O
Employee Benefits
Energy
Environmental Liability
ERM
Financial Services
FINEX
Global
Health Care
Middle East
Mining
Power
Real Estate
Reinsurance
Renewables
Supply Chain
Terrorism
Trade Credit

About Tom Teixeira

Tom is the London-based Practice Leader, Integrated Risk Management, where he focuses on aerospace, oil and gas, mi…
Categories: Supply-Chain Risk

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