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Home / Blogs / 2018 EventWatch Summary – Year of Global Uncertainty

2018 EventWatch Summary – Year of Global Uncertainty

2018 EventWatch Summary – Year of Global Uncertainty

Mar 04, 2019

Shahzaib Khan

Uncategorized

Download the full 2018 annual report Download Report now

For corporations with international supply chains, 2018 provided many familiar challenges—from managing the impacts of fires and natural disasters on suppliers and logistics vendors to analyzing the risks that a merger and acquisitions (M&A) could lead a supplier to stop producing certain parts or components. But Resilinc’s 2018 EventWatch data and our qualitative analysis of supply chain issues affecting our customers reveal that highly fluid geopolitical issues— especially the U.S.-China trade conflicts and Brexit—posed some of the most potentially costly and disruptive supply chain impacts in 2018. And early indications are these will continue through 2019 at the least.

As this report was being finalized a few weeks before the March 29 Brexit deadline, Great Britain and the European Union had not reached a trade agreement. This meant that every company importing or exporting across UK/EU borders was facing possible new tariffs as high as 4.5%—multiplied by two or three for products that cross borders multiple times. And delays at new customs checkpoints threatened to derail finely tuned inventory management practices.

Similarly, there was tremendous uncertainty over tariffs imposed by the U.S. on Chinese imports, by reciprocal Chinese tariffs on U.S. goods. Well into the first quarter of 2019, supply chain managers were weighing multiple U.S.-China trade scenarios: Would tariffs be maintained, increased, reduced? Would prospects improve for a trade deal in the second or third quarter? Would the U.S. trade representative grant more tariff-exclusion requests from U.S. importers on top of those granted for 984 products in December 2018?

In the taxonomy of Resilinc’s EventWatch, changes in tariffs and trade policies are reported to our customers as Regulatory Change events; and in 2018, the number of these events occurring increased by 640%. While some of the change can be attributed to a refinement in our criteria, this data point—as well as the 370% year-on-year increase in Protests/Riot events—speak to growing political turmoil globally.

To be sure, there were plenty of more immediately disruptive events in 2018. The top 5 most significant events were all natural disasters: four extreme weather events and the February 2018 Taiwan Earthquake. In combination, these natural disasters impacted more than 24,000 supplier sites with an average time to recovery (TTR) of between 19 and 25 weeks.

Throughout the year, Resilinc’s EventWatch system issued a total of 2,629 event alerts—more than seven per day, on average. Of these, we classified 907 events as those impacting our customers’ mapped supplier sites, and therefore requiring an impact assessment. Overall, our event data showed that 21,152 suppliers and 58,191 supplier sites producing 552,950 parts across Tiers 1, 2 and lower tiers were potentially affected during 2018.

Of the 40+ types of events we monitored in 2018, the five that occurred most frequently were: Merger & Acquisitions Factory Fire/ Explosions; Reorganization/ Management Change; Business Sale or Spin-off; and Factory Shutdown/Disruption.

What can be said with certainty is that 2018 showed continuing acceleration in risk and uncertainty for supply chain managers. One particularly concerning data point that emerged in our 2018 EventWatch data: 66% of the sites EventWatch flagged as potentially affected by an event were manufacturers; and of these, only 12% had identified an alternate manufacturing site to meet customer needs in the event of disruption to the primary manufacturing site.

With the global supply chain so fraught with uncertainty and instability at the moment, supply chain professionals should be examining where sole-source manufacturing suppliers make their supply chain vulnerable and how they can work with suppliers to identify and qualify alternate manufacturing sites. This is just one example of the opportunities to reduce risks of disruption and improve the overall resiliency of the supply chain systems that are at the heart of companies’ performance and profitability.

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