Supply Side
‘Mirror Mirror on the Wall’ – which country has the riskiest supply chain of them all?

We came across this article on CSCMP’s Supply Chain Quarterly which alerted us to the publication of the results of insurance company FM Global’s ‘Global Resilience Index,’ which ranks countries based on their ability to tolerate disruptive events.

Brion Callori, senior vice president of engineering and research for FM Global explained that FM Global had designed the index as a strategic tool to help business executives gain a better, macro sense of the resiliency of their global supply chains. It helps companies assess the risk level of suppliers and customers based on where they are located. Because supply chain risk is such a hot topic and relevant to all sectors, we thought we’d take a look.

It’s an online, interactive, data-driven tool that ranks 130 countries and territories based on their resilience in respect to disruptive events. It’s easy to download and easy to use. “The Index is calculated based on 12 key drivers of supply chain resilience, which are grouped into three categories: economic, risk, and supply chain factors. These factors are combined to form the composite index score. Scores are assessed on a scale of 0 to 100, with 0 representing the lowest resilience and 100 being the highest resilience,” the article explains.

The 12 key factors that results are based on are: productivity, political risk, oil intensity (vulnerability to an oil shock), exposure to natural hazard, natural hazard risk quality, fire risk quality, control of corruption, quality of infrastructure (includes transportation, telephony, and energy), and quality of local suppliers; inherent cyber risk, urbanization rate, and supply chain visibility. The last three are new to this year’s index.

What’s particularly useful is that it allows you to export the data (based on five-year country trends) for further analysis and you can include that in reports and presentations. You can look at the results in aggregate or choose a county to analyse.

So who are the winners and losers in the 2017 results?

Switzerland came first, scoring 100/100. Here’s a taster of what the index says about this country:

“Switzerland, an acknowledged area of stability for generations, has ranked 1 for the past five years using the 12 drivers. Excellent infrastructure and political stability contributed to the final ranking. Despite its overall top-spot ranking placement in the top quartile for risk quality, the data reveal some natural hazard exposures for Switzerland. But, these risks are offset by the presence of good local standards. Like many countries, Switzerland is exposed to inherent cyber risk (a new driver in the index). However, that driver has gradually improved over the past five years, bringing Switzerland in line with most European countries.”

Luxembourg reached number 2, coming from 8 in 2013 –  this is partly a result of its reduced reliance on oil for economic productivity, a continued growth in the importance of its services sector, a strong financial sector, a network of service providers and its responsive, business-friendly regulations. The country is well-placed to benefit from financial institutions that may be seeking a new home, post-Brexit, following the United Kingdom’s departure from the European Union, the report explains.

Fairly closely behind are: Sweden, Austria, Germany, Norway, Denmark, Finland, and the United States. Countries including Nigeria, Pakistan and Venezuela are in the bottom 10 with Haiti the lowest scoring country of all – scoring 0. The report explains that Haiti is among the poorest countries in the world, and Venzuela is a victim of wind, earthquakes, a perception of extensive corruption, poor infrastructure and ill-perceived local supplier quality.

Countries are ranked individually by ‘threat’ so while one country might score higher than another overall, it may score lower than some others on one or some of the 12 drivers. It’s a useful tool, aimed primarily at corporates, but identifying and therefore being in a better position to mitigate risk, and therefore strengthening resilience towards disruptive events, is also crucial for economic and social benefits to citizens and governments around the world.

The index as a tool can be accessed here and a good Executive Summary can also be downloaded from the landing page.