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The high costs to supply chain glitches

Supply chain disruptions are widely regarded as one of the greatest risks facing manufacturers, and have become a top concern of global insurance providers, according to international supply chain risk management specialist, Professor Gregory Schlegel.

He warned that a glitch in an organisations supply chain could cost up to 10% of its shareholder value, and put the company out of business.

“About 25% of companies that experience a moderate to severe supply chain disruption go out of business around 18 months after the incident. It is a sobering thought, and not a statistic that we ever read about, because few companies or brands want to advertise the fact that they were ruined because they were not prepared.

“Research shows that if a business is not prepared, even a single small to medium supply chain disruption can cost it as much as R6 million,” he added.

Schlegel, who is the founder of Supply Chain Risk Management Consortium, will be sharing his insights with Southern African supply chain professionals at the first Supply Chain Risk Management Summit, from 12 to 14 February 2018 in Sandton, Johannesburg.

The consortium comprises 20 leading multinational organisations that are collaborating to develop skills, solutions and methodologies to enable businesses to manage enterprise risk.

He said, “Never before has there been such exponential growth of supply chain complexity, uncertainty and risk as we are seeing today.

“With globalisation expanding at a remarkable rate, supply chains have moved into areas where they have never operated.

“Most companies across the globe are experiencing an average of seven to ten supply chain risk incidents a year – from port congestion to poor supplier performance and changing weather patterns. This equates to an annual cost of R60 million.”

Supply Chain Risk Management Summit

The inaugural Supply Chain Risk Management Summit will be hosted by Bespoke, a leading African contracting, procurement and supply chain management advisory and training provider, in partnership with Southern African supply chain and operations management association SAPICS.

Andrew Hillman, CEO, Bespoke, said, “Supply chains are becoming ever more complex, particularly with the increase in outsourcing and the advancement of multi-tiered global supply networks. More and more organisations are now faced with direct and continuously evolving operational and legislative risks as a result of market disruption or malpractice in their supply chains.

“Professor Gregory Schlegel’s deep understanding of supply chain risk and resiliency prompted Bespoke to invite him back to South Africa in early 2018 to deliver a risk management workshop to one of our clients in the financial sector and to lead a three-day public programme entitled ‘Pragmatic Approaches to Supply Chain Risk and Resiliency’. The latter then evolved into the inaugural Supply Chain Risk Management Summit, jointly created by Bespoke and SAPICS.”

The three-day Supply Chain Risk Management Summit also features a keynote address by motivational speaker, author and entrepreneur Abel Mukwevho of The Abel Mukwevho Organisation.

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