Supply chains are an integral part of the globalised economy, as most countries are not self-sufficient in providing goods and services. A characteristic of globalisation is an interconnected world, which means that one can purchase fresh fruit and vegetables – even if they are out of season in your own country – and order the latest products and services from overseas suppliers, via the internet, from anywhere in the world.
Although a country may have a strong manufacturing sector, raw materials may still need to be imported and transported to factories due to factors such as the location of mineral deposits, the location of the factories and the distribution of their finished goods to their customers. Under stable conditions, people seldom consider the supply chain management process, which includes planning, organisation and cost to manufacture and deliver goods and services to customers.
The global and local supply chains have experienced significant disruptions in recent years. Mogoboya Matsebatlela, within supply chain management, gave us the following list of risks that may be identified within the SCM environment to think about:
- Cloning or forgery of NLC purchase orders and false requests (RFQ etc.)
- Collusion between staff and service providers
- The high number of tender complaints
- Ineffective contract management
- Misuse/Leaking of privilege information (Information Security)
- Non-compliance to the Supply Chain Management Prescripts as per PFMA, Treasury Regulations, policies etc
- Poor/Non- performance of suppliers
- Theft, loss or tempering of tender documents in the tender box
Therefore, it is necessary to change from a reactive to a proactive management approach to supply chain risk – to identify the interdependencies before the event occurs. Risks do not occur in isolation, and risk management frameworks must incorporate the interconnectedness of underlying causes and risks. Today’s risk manager will have to understand the interconnectivity of risk, as a disruption that originates with the main supplier, or actions by the consumer, can have an adverse effect on the entity.