In the dictionary, disruption is defined as “disturbance or problems that interrupt an event, activity, or process.” So, a supply chain disruption definition is a breakdown in the manufacture flow of goods and their delivery to customers. While the “broken link in a chain” analogy worked in the past, today’s complex supply networks are rarely so straightforward. You might think of supply chain coordination as more like cogs in a machine that need mesh simultaneously. So, disruption makes everything stop at once – the proverbial wrench in the works.
What is supply chain disruption management?
To manage supply chain disruptions effectively, you must be able to react immediately when adverse events strike your operations. Here are few key steps:
- Quickly assess critical events
- Identify any risks related to delivery of goods from your suppliers
- Evaluate the viability of your suppliers
- Secure supply, and ensure that you can meet customer commitments
Particularly following the coronavirus outbreak, many enterprises are realizing that it is not enough to optimize the cost of supply chain operations. No matter how finely tuned a machine is, disruption will happen, and the cost of reacting to events is usually many times higher than being ready for them.
What is supply chain disruption risk?
To clarify a few terms briefly in this context, a threat is an event that could harm your supply network. A risk is the potential for loss or damage resulting from the threat. Using our idiom, the wrench is the threat. The risk is that someone could drop the wrench into the machine. Then the cogs of the machine will stop, and the machine will break down. This causes all kinds of costs, including repairing the machine, lost production time, and so on. Identifying supply chain disruption risk is therefore identifying what could go wrong in your supply network, and the extent of damage when it happens.