Regulatory changes, food fraud and the ongoing effects of Covid-19 are likely to dominate global supply chains in 2021, according to a report.
In the report, BSI, the business improvement and standards company, said the Covid-19 pandemic had forced organisations to adjust in new ways to maintain supply chain continuity, integrity, and overall resilience over the last year.
Jim Yarbrough, global intelligence program manager at BSI, said: “Covid-19 will certainly have latent effects on organisational resilience throughout 2021, directly and indirectly shifting the way organisations do business.
“However several other challenges, including increased regulation of supply chains and forced labour, are poised to challenge organisational resilience and business continuity as the world continues to grapple with the lingering impacts of the pandemic.”
BSI's five trends impacting global supply chains in 2021:
1. Ongoing Covid-19 challenges create new threats for organisations
The pandemic exacerbated historical trends such as cargo theft, man-made disruptions and political protests, which all continue to pose a risk to supply chain resilience in 2021, BSI said.
In the last year, there was an increase in thefts from facilities in Africa and Europe and an overall increase in stolen medical supplies, it said.
“As the spread and impact of Covid-19 reduces, cargo theft trends are expected to return to pre-pandemic levels, with certain types of goods losing value again, such as personal protective equipment, and the resumption in trade leading to more movement of vehicles, restoring thieves’ opportunities to again strike this transportation mode,” it said.
2. Economic hardship increases the risk of labour exploitation, human rights violations and stowaway smuggling
The pandemic pushed some countries into lockdown, but it also put the world’s most vulnerable communities at greater risk of labour exploitation and human rights violations.
“School closures combined with ongoing reduced family incomes suggest a greater potential for child labour in the year ahead as all family members are forced to work as they try to make a living,” BSI said.
Border closures and other pandemic impacts led to a decrease in migration in 2020, but new stowaway smuggling routes and labour risks developed later in the year as controls declined.
“While mass migration on its own does not pose an overt threat to supply chains, it is the tendency for some individuals, often facilitated by organised crime, to exploit gaps in security that are the real risk to individuals and organisations and will likely be at the forefront of supply chain risks in the year ahead,” the report said.
3. Drug smuggling means and methods will change and evolve
The spread of Covid-19 also led drug smuggling groups to adapt in tactical ways that led to altered risks to supply chains.
BSI said: “The spread and response to Covid-19 cut off traditional supply chains through lockdowns and mobility bans, challenging operators, port security and other introduction points. Despite these changes, smugglers adapted to the Covid-19 world by changing their means and methods while largely following historic patterns.
“Gangs in the traditional production centres for illegal drugs in Latin America and Asia continued to produce and attempted to transport to the same destinations. However, smugglers employed novel methods of concealment or used new routes to move shipments of illegal drugs to destination markets in North America and Europe.”
These new means and methods of drug smuggling will present additional risks and challenges within supply chain operations in the year ahead, it added.
4. Food fraud and safety will continue to challenge supply chain resilience
Panic buying and stockpiling exposed flaws in global food supply chains that criminals could use to introduce fraudulent food into legitimate supplies, BSI said.
“Part of the challenge lies in the globalisation of food supply chains, which sources inputs from an array of countries that may or may not have a robust framework and enforcement apparatus available to combat fraudulent practices,” it said.
Given the significant level of global food shortages, the risk of food fraud is on the rise. Alcohol and tobacco products specifically saw a global increase in thefts and counterfeiting, BSI said.
Issues of food safety will also continue to be a concern, as the spread of Covid-19 last year significantly affected government capacity to enforce food safety regulations.
5. Regulatory changes will test organisational adaptability
Last year, governments around the world passed a range of regulatory and legislative measures on supply chain due diligence and compliance. This will continue to affect supply chains and are likely to challenge organisational resilience.
“It is almost certain that organisations will have to increasingly scrutinise the supply chain for susceptibility to labour violations, as a number of governments made a concerted effort to address this issue,” BSI said.
“As such, these new regulations pertaining to security could have impacts on business operations in 2021, underscoring the need for continuity planning.
“In addition to regulation aimed at eliminating the use of forced labour in the supply chain, regulatory developments surrounding sustainable sourcing and deforestation, as well as cargo and port security, will impact organisations throughout the year ahead,” it said.
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