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Resilience in the new normal

Actionable steps for building resilient supply chains

The central theme of this year’s Ports and Freight Yearbook is resilience.

The past few years have been turbulent to say the least. While the worst of the global supply chain disruptions appear to be behind us, a key lesson learned from the pandemic is that we need to be prepared for the unexpected. Climate change, widespread digitisation, an uncertain economic environment, and geopolitical tensions have the potential to individually and collectively disrupt organisations and their supply chains.

In this context, organisations are looking for actionable frameworks that can shift the dial in terms of preparedness. One leading framework that is quickly rising in prominence uses an ‘all hazards’ approach to managing and protecting critical assets – unlocking the potential to generate an immense amount of value for organisations and the focus of the first article in our Yearbook.

An ‘all hazards’ approach is being increasingly adopted by organisations around the world, helping them respond to the rapidly expanding collection of nuanced hazards materialising in the current operating environment. This approach involves identifying critical assets, their interdependencies, and assessing how key functions could be disrupted by material factors. This more converged approach is designed to work holistically across business units to ensure all relevant risks are identified. At the end of the day, services are delivered through assets, and multiple organisational functions have a role to play in the efficient and effective management of these assets. Therefore, an approach is needed that builds from the asset level up.

This approach represents a fundamental shift from more traditional enterprise level models through its granular focus on assets and their role in an organisation’s ability to operate effectively. While it may involve a significant risk component, the framework is more closely aligned with uplifting resilience across asset management and operations. 

The application of an ‘all hazards’ lens allows those operating across the supply chain to understand and mitigate potential sources of risk across supply touch points in, and outside, an organisation. This enables organisations to identify and better manage critical suppliers and the full suite of potential risks, such as supplier concentration, geopolitical risk, and third-party access to an organisation's critical data and assets through the supply chain.

The ‘all hazards’ approach has been central to recent reforms to the regulatory frameworks governing critical infrastructure security and resilience in Australia. These reforms require relevant entities to now develop a structured risk management programme applying an asset-based, all hazards lens. The objective is to ensure critical infrastructure owners take a holistic and proactive approach toward identifying, preventing, and mitigating risks, recognising that the frequency and severity of hazards continues to grow.

The ‘all hazards’ framework enables an organisation to:

  • Better identify its critical assets, critical supply chain touch points and relevant stakeholders both internally and externally,
  • Identify the material supply chain risks that could impact on their critical assets and, therefore, service delivery,
  • Contextualise its current state,
  • Identify any gaps between an organisation’s current state and target state against leading international practices, and
  • Based on the above, develop and implement a prioritised programme to close those gaps and monitor progress.

The net effect of these steps is to help an organisation anticipate and prepare for potential disruptions that could manifest in its supply chain. This reorientates the parts of an organisation that engage with the supply chain to proactively manage potential risk through a structured programme, rather than reacting to risk on an ad-hoc basis.

Our Yearbook also takes a holistic view of resilience. In addition to discussing how an ‘all hazards’ framework can be applied to secure supply chain resilience, the Yearbook covers:

  • Recent government investment in the coastal shipping and what role this might play in a more resilient national supply chain. Recent damaging weather events further highlighted the need for resilient transport networks, with shipping access proving key to ensuring isolated communities remained supplied with essential goods. It will be interesting to see whether the upcoming government budget will include increased investment in enhancing transport resilience. 
  • Climate change and supply chains, including the implications for supply chain resilience.

Stay tuned for the next blogs in our series covering climate change and supply chains and the economic outlook for the supply chain.

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