A new report from BSI highlights the top challenges, developments, and trends likely to impact supply chains in 2019.
The Supply Chain Risk Insights Report identifies five major themes that are most likely to impact the supply chain this year. The five themes are:
- Revision of the Minimum Security Criteria under the US Border Protection’s Customs-Trade Partnership Against Terrorism (CTPAT)
- Supply chain growth in Africa
- Ongoing mass migration
- Dramatic shifts in politics
- Continued cybersecurity threats
BSI Global Intelligence Program Manager Jim Yarbrough said we’re seeing key shifts to global supply chains driven by changes in the geopolitical landscape.
“The concern is that as supply chains change—with Chinese companies moving operations to Africa, for example, or the U.S. sourcing goods from other Southeast Asian nations—major implications will also evolve,” Yarbrough said.
“Increased exposure to labor exploitation, terrorism, corruption, and natural disasters must be a consideration for companies making changes to their supply chain and best practices must be maintained in order to prevent threats to business continuity or corporate social responsibility.”
The report provides analysis of each of the five top supply chain challenges and includes developments and trends to help organizations increase their understanding of potential exposures.
CTPAT Minimum Security Criteria
Within the United States, companies enjoying trade benefits under CTPAT will soon need to meet new criteria for certification in order to meet the evolving risks of today’s operational environment. As the revised criteria for CTPAT are unveiled, companies will need to undertake efforts to achieve supply chain security and mitigate emerging risks.
Exposure to varying risks in Africa
BSI’s report reveals the potential for increasing movement of supply chains to Africa, particularly among companies based in China. Shifting manufacturing operations to Africa, where labor and shipping costs are cheaper, can be cost-effective compared with China.
However, BSI warns organizations to be wary of the relatively unchecked risk of terrorism in African countries—where 23 percent of all supply chain terror incidents allegedly take place.
Migration continues to pose a risk
As conflict, together with political and economic conditions, continue to drive mass migration, businesses must contend with the challenge of security and corporate social responsibility risks.
This year’s report records an increase in stowaway and labor exploitation risks stemming from migrants traveling along three major flows: Central to North America, Intra Southeast Asia, and Africa and the Middle East to Europe.
BSI has also noted regression in countries such as Brazil—where budget cuts are reducing the resources available to carry out inspections.
BSI believes this issue will remain key for supply chains in 2019, and companies must invest in a more thorough understanding of their supply chain to truly assess the risk of migrant laborer exploitation.
Dramatic policy shifts
Recent shifts in political ideology in the governments of Brazil, Mexico, the United Kingdom, India, and the United States are setting the stage for an eventful 2019.
Newly-elected leadership in Brazil and Mexico are attempting to chart a new course in Latin America. President Bolsonaro in Brazil has swiftly undertaken efforts that may pose corporate social responsibility risks for some industries operating in Brazil, particularly in relation to the rights of workers, the LGBTQ community, and indigenous territories. BSI recommends companies take a more active due diligence role on business partners in Brazil.
Mexico’s president is undertaking new initiatives to curtail corruption that has historically underwritten organized crime, cargo theft, and oil theft in the country. The ramifications of such initiatives may have sweeping consequences for business continuity and cargo security, but despite President Obrador’s actions, BSI expects that security challenges will continue to affect businesses in the coming year, in particular in-transit cargo theft.
The U.S.-China trade dispute has raised new concerns related to intellectual property protections and the relocation of relevant facilities for a host of businesses. However, companies looking to other Southeast Asian countries should weigh the costs of tariffs against the cost of increased risks to their supply chains.
The outcome of negotiations on Brexit remains unclear, creating ripples of uncertainty through supply chains operating within and through the United Kingdom and the European Union.
Within this new global landscape, cybersecurity stands as an overarching and multi-faceted struggle for all parties throughout the supply chain. Securing data and facilities in a fast-paced and modular world connected by the Internet of Things is an emerging challenge that all supply chain professionals will continue to grapple with in 2019.
Click here to download a copy of BSI’s Supply Chain Risk Insights Report.