According to business experts, a supply disruption is an unexpected event that disturbs the normal flow of goods and materials in a supply chain. Such disruptions can cause negative impacts on the management of operations.
Supply disruptions can be caused due to various reasons, like physical damage at production facilities, capacity issues, natural disasters, strikes and labor disputes, inventory problems, incorrect forecasts, and delays. Some of the supply chain risks and resilience are:
1. Financial risks
Financial risks include budget runout, constructive differences, and missed breakthroughs that require additional funding. It also encompasses unexpected cost overruns that may be connected with other risk factors like changes in the scope of work required to successfully complete the activity.
2. Schedule risk
Most of the time as a result of poor project definition, there are primary risks that threaten the timeline and also have cost implications.
These are often a result of natural disasters such as hurricanes, fires, floods, or as a result of issues generated by the supplier. It can also occur as a result of technological changes generated by the market.
3. Legal risks
Legal and legitimate risks are often related to disturbances or different interpretations of contractual accountability, or from not meeting the terms and conditions. Use or misuse of intellectual equity can also be considered a legal risk, especially when the patent violation is a possibility.
4. Environmental risk
In the sourcing cycle, it is difficult to calculate the environmental risks created by your provider or contractor. These include the organization’s negative impact on soil, air, and water due to discharges, emissions, and other forms of waste.
5. Socio-political risk
When the administrative environment changes in response to a different government or to increase awareness of social situations, many existing organizations experience difficulty in adapting. Sourcing efforts, especially those in low-cost countries, are necessary to consider the impact of these changes on business and cultural operations within that environment.
6. Human behavior risk
Sometimes the project may be put in danger due to an illness, injury, or departure of key personnel.