Supply Chain Risk

Controlling the Known Unknowns

Insights by Emily Denney

Building a resilient supply chain is strategically imperative. With the geopolitical climate changing more rapidly than any of us are used to ensuring supply chain risk can be mitigated is essential.

We’ve seen the winners and loser of this across the years and with the support of the wonderful Paul Kefford of Atlas Procurement Solutions we are outlining how vital supply chain risk is and how we can work towards achieving supply chain transparency.

Paul Kefford, Founder of Atlas Procurement Solution, with over 20 years’ experience leading procurement and supply chain strategies across global organisations. He’s known for delivering cost-effective, sustainable solutions and driving operational excellence.

What do you know? What can you control?

In any supply chain you have the “Known Knowns”, the “Known Unknowns” and the “Unknown Unknowns”. Supply chain risk firmly sits in the Known Unknowns category, you know there will be risk in your supply chain, but you may not know exactly where this risk sits.

For example, If there are only one or two suppliers for one specific product or resource which is vital to your supply chain of your end product – this is a known risk of an unknown problem.

If you embed controlling the Known Unknowns early on in strategic development you can help mitigate this risk.

This is something which is rarely acknowledged until the spotlight is already on a problematic category. This often a has huge knock-on effect (think back to the semiconductor shortage spanning from 2020 to 2023). This shortage impacted more than 169 industries and became global news.

Diversification over Dependence

Understanding Supply Chain Risk

Moving forward with the chip shortage as an example, TSMC is the world’s largest and most valuable semiconductor foundry based in Taiwan, who are the world’s largest and most advanced chip maker. As you can imagine, given their size and scope, TSMC are often a sole supplier which can lead to potential risk of the supply chain.

Relying on a single source or a single region can be risky! There are certain times where diversification cannot take place, but the vast majority of the time, diversification of a supplier base can mitigate risk, improve resilience and aid in cost optimisation.

Further reliance on these chips will continue to grow with the global demand for AI chips.

Without the required diversification, there is a supply chains risk that overdependence on single suppliers will again wreak havoc on supply chains.

Diversification of suppliers is integral to mitigating supply chain risk.

Diversification should be implemented from the start of projects, not just once issues come to light. It not only supports agility and adaptivity but also encourages innovation and access to new markets.

Transparency and Visibility

Mitigating Risk in your Supply Chain

Transparency and visibility are critical components in managing supply chain risk effectively. In today’s global economy, disruptions – ranging from natural disasters to geopolitical tensions – can ripple across supply chains with huge consequence.

Transparency ensures that all stakeholders have access to accurate and real-time information about the movement of goods, sourcing practices, and potential vulnerabilities.

Visibility provides a clear view into every tier of the supply chain, with enhanced visibility, organisations can identify risks early and take proactive measures to mitigate them. It also fosters accountability and trust, which is essential for collaboration and resilience.

Together, transparency and visibility empower businesses to anticipate disruptions, react quickly and maintain continuity.

They also support compliance with regulatory requirements and growing consumer demands for ethical and sustainable sourcing.

Scenario Planning & Risk Modelling

When building out a comprehensive supply chain risk strategy, scenario planning and risk modelling are foundational elements that significantly enhance overall strategy. These tools allow organisations to move beyond reactive approaches and instead adopt a proactive mindset.

Scenario planning helps businesses anticipate a wide range of potential disruption, from supplier insolvencies to geopolitical conflicts, by simulating their impact on the supply chain. This foresight enables the development of tailored contingency plans, ensuring that operations can either continue or recover quickly when disruptions occur.

Risk modelling, meanwhile, quantifies the chance and potential severity of these scenarios using historical data, predictive analytics, and simulations. This allows organisations to prioritise risks based on their likelihood and impact, allocate resources more effectively.

Ultimately, scenario planning and risk modelling are critical for creating a resilient, responsive, and competitive supply chain in an increasingly unpredictable world.

• Align teams with shared risk insights for faster, unified decisions.
• Meet compliance and ESG goals by exposing hidden vulnerabilities.
• Strengthen suppliers through joint planning and transparency.

Risk Management | Procurement Guide | 2024 Insights

Talent and Collaboration

Whilst supply chain risk is something which should be embedded in an organisation from the start of each and every project, this unfortunately is not typically the case. Which is where an outsourced solution is an alternative that organisations may consider, this itself can take multiple guises.

• Upskilling from within, this is a cost-effective solution which is not overly time efficient – but there is a trade-off for everything! This option works best when in the early stage of the project and not when the risk has already become an issue after identification.
• Interim support, bringing in a professional interim specialising in supply chain risk. This will be an individual who will be able to deliver a clear scope of work in a clear timeframe and consult from an external angle while still working closely with your team and stakeholders – often upskilling the existing team in the process.
• Outsourced solution, this is where an external solution such as Atlas Procurement Solutions comes in, with a mission to offer transparency, cost savings, and peace of mind alongside delivering savings and develop relationships this is an external solution which can often be delivered on a more competitive basis than your traditional consultancy.

Controlling the Unknows, my take on Supply Chain Risk

In an era defined by volatility and complexity, managing supply chain risk is a strategic imperative. From controlling the “Known Unknowns” to embracing diversification, transparency, and scenario-based planning, organisations must embed resilience into the very fabric of their supply chain strategies.

The lessons of recent global disruptions, such as the semiconductor shortage, have made it clear; overreliance, lack of visibility, and delayed risk recognition can have far-reaching consequences.

By investing in tools like risk modelling, fostering supplier diversification, and leveraging external expertise when needed, businesses can mitigate risk and unlock new opportunities for innovation and growth. Whether through internal upskilling, interim support, or trusted partners like Atlas Procurement Solutions, the path to a resilient supply chain is built on collaboration and adaptability.

Ultimately, the organisations that thrive will be those that treat supply chain risk not as a threat to be feared, but as a challenge to be mastered.

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