BSI Eyes Top Supply Chain Challenges for 2019
April 23, 2019
has identified five major themes that are most likely to impact the
supply chain in 2019. The analysis of how these five themes will affect
supply chains this year forms the business improvement company's annual
analysis of global supply chain risks.
The five themes are:
Revision of the Minimum Security Criteria under the US Border
Protection's Customs-Trade Partnership Against Terrorism (CTPAT)
Supply chain growth in Africa increasing exposure to varying risks
Ongoing mass migration posing both security and corporate social
Dramatic shifts in politics including those in Brazil, the US-China
trade dispute, and uncertainty over Britain's departure from the
The continued threat to supply chains posed by cybersecurity issues
BSI has also identified several key trends in supply chain risk from
Food and beverage remains the top commodity stolen
Metal has now entered the top five commodities stolen worldwide
Poor working conditions led as the top labour violation recorded last
Labour strikes most frequently disrupted manufacturing operations
Jim Yarbrough, Global Intelligence Program Manager at BSI, said: "We're
seeing key shifts to global supply chains this year, driven by quite
dramatic changes in the geopolitical landscape. The concern is that as
supply chains change – with Chinese companies moving operations to
Africa, for example, or the US sourcing goods from other Southeast Asian
nations – major implications will also evolve.
"Increased exposure to labour exploitation, terrorism, corruption and
natural disasters must be a consideration for companies making changes
to their supply chain, and best practices must be maintained in order to
prevent threats to business continuity or corporate social
The report provides analysis of each of these top supply chain
challenges, developments, and trends to help organizations increase
their understanding of potential exposures. A sample of the analysis by
theme is identified below:
CTPAT Minimum Security Criteria
Within the United States, companies enjoying trade benefits under CTPAT
will soon need to meet new criteria for certification in order to meet
the evolving risks of today's operational environment. As the revised
criteria for CTPAT are unveiled, companies will need to undertake new
efforts to achieve supply chain security and mitigate emerging risks.
Exposure to varying risks in Africa
BSI's report reveals the potential for increasing movement of supply
chains to Africa, particularly amongst companies based in China spurred
on by the US-China trade dispute. Shifting manufacturing operations to
Africa, where labour costs are lower and shipping to the US or Europe is
cheaper and can be cost-effective compared to staying in China.
However, BSI warns that the relatively unchecked risk of terrorism in
African countries, where 23 percent of all supply chain terror incidents
take place, sets the operational environment apart from that of Asia.
Companies whose supply chain moves to Africa must be wary of this
increased risk, often compounded by corruption among security and
Migration continues to pose a risk
As conflict, together with political and economic conditions, continue
to drive mass migration, businesses must contend with the double-edged
challenge of security and corporate social responsibility risks.
This year's report records an increase in stowaway and labour
exploitation risks stemming from migrants traveling along three major
flows: Central to North America, Intra Southeast Asia, and Africa and
the Middle East to Europe.
BSI has also noted regression in countries such as Brazil – where budget
cuts are reducing the resources available to carry out inspections –
that could increase the risk of migrant labour exploitation.
Approximately half (48 percent) of all corporate social responsibility
(CSR) incidents recorded by BSI in the last year involved migrants. The
often desperate need for income to support their family leads many
vulnerable individuals into labour exploitation.
BSI believes this issue will remain key for supply chains in 2019, and
companies must invest in a more thorough understanding of their supply
chain to truly assess the risk of migrant labourer exploitation.
Dramatic policy shifts
Recent shifts in political ideology in the governments of Brazil,
Mexico, the United Kingdom, India, and the United States are setting the
stage for an eventful 2019.
Newly-elected leadership in Brazil and Mexico are attempting to chart a
new course in Latin America. President Bolsonaro in Brazil has swiftly
undertaken efforts that may pose corporate social responsibility risks
for some industries operating in Brazil, particularly in relation to the
rights of workers, the LGBTQ community, and indigenous territories. BSI
recommends companies take a more active due diligence role on business
partners in Brazil, to fill gaps left by the government's removal of
some regulatory requirements.
president is undertaking new initiatives to curtail corruption that has
historically underwritten organized crime, cargo theft, and oil theft in
the country. The ramifications of such initiatives may have sweeping
consequences for business continuity and cargo security, but despite
President Obrador's actions, BSI expects that security challenges will
continue to affect businesses in the coming year, in particular
in-transit cargo theft.
The US-China trade dispute has raised new concerns related to
intellectual property protections and the relocation of relevant
facilities for a host of businesses. However, companies looking to other
Southeast Asian countries should weigh the costs of tariffs against the
cost of increased risks to their supply chains. Exposure to child labour,
forced labour, and natural disasters are each prevalent in other
Southeast Asian countries.
The outcome of negotiations on Brexit remains unclear, creating ripples
of uncertainty through supply chains operating within and through the
United Kingdom and the European Union.
India's ongoing elections in April and May could create a shift in
politics with effects on global supply chains. Workers' dislike of many
recent policies, with strikes over low wages and fuel prices, could
cause immediate disruption and longer-term changes.
Within this new global landscape, cybersecurity stands as an overarching
and multi-faceted struggle for all parties throughout the supply chain.
Securing data and facilities in a fast-paced and modular world connected
by the Internet of Things is an emerging challenge that all supply chain
professionals undertook in 2018 and will continue to grapple with in