- GANS Article
International trade exposes businesses to risks that may originate far beyond their immediate suppliers. A shipment delayed at a port, a shortage at a sub-supplier, an unexpected regulatory change or a sharp currency movement can interrupt supply even when the direct supplier appears dependable.
The challenge is that many businesses discover these vulnerabilities only after an order is late, unavailable or unexpectedly expensive. Purchase orders, supplier records and logistics updates are often held in separate systems, while responsibility is divided between procurement, operations, finance and logistics teams. This can make early warning signs difficult to recognise.
Identifying supply-chain risk therefore requires more than reviewing suppliers once a year. Businesses need a repeatable process for mapping dependencies, measuring exposure and acting on changes before they affect customers.
Why supply-chain risks remain hidden
A company may know who supplies a finished product without knowing which manufacturers, raw-material producers or logistics providers sit further upstream. That missing visibility matters because several apparently independent suppliers may depend on the same factory, port, carrier or source country.
Deeper-tier visibility is improving, but it remains incomplete. McKinsey’s 2025 supply-chain risk survey reported a 22-percentage-point increase in organisations with visibility into tier-two suppliers, indicating both progress and the continued importance of looking beyond direct vendors. McKinsey supply-chain risk survey
External pressures also remain significant. According to the RS 2026 Indirect Procurement Report summarised by CIPS, 68% of respondents identified inflation and higher costs as a coming challenge, while 50% cited managing supply-chain risk. Supply-chain disruption and global political uncertainty were each cited by 47%. CIPS report summary
These findings reinforce three priorities:
Identify products that depend on one supplier, one country, one transport route or one specialised production facility.
Monitor direct suppliers while obtaining practical information about important manufacturers, sub-suppliers and logistics partners.
Establish alternatives and response plans before an interruption occurs, rather than beginning the search when supply has already stopped.
Map the supply chain from requirement to delivery
Risk assessment should begin with an end-to-end map of how critical products reach the business. For every important category, the map should identify:
- The contracted supplier and actual manufacturer
- Manufacturing and consolidation locations
- Important raw materials or components
- Ports, border posts and transport modes
- Freight forwarders, carriers and clearing agents
- Import permits, standards and supporting documents
- Normal lead times and known seasonal constraints
- Internal facilities and customers that depend on the product
Not every item requires the same level of investigation. A practical starting point is to classify products according to operational importance, replacement difficulty, lead time and financial exposure.
A low-value product can still be critical if operations cannot continue without it. Conversely, an expensive item may present limited continuity risk if suitable alternatives are readily available. The assessment should therefore consider business impact as well as purchase value.
Furthermore, the merger provided Company with enhanced buying power through the combined volume benefits from shared suppliers. This advantage led to a reduction in the cost of goods sold (COGS), further contributing to overall cost savings.
Through our diligent efforts, we identified hundreds of millions of dollars in cumulative synergies that Company could capitalize on following the merger. The company has successfully reinvested a significant portion of these savings into strengthening its brands and fostering continued growth and success.
Build a focused risk register
A supply-chain risk register converts general concerns into measurable exposures. Each identified risk should include its cause, likelihood, potential impact, existing controls, warning indicators and responsible owner.
Common risk categories include:
- Supplier financial or operational failure
- Single-source and geographic concentration
- Quality deterioration or inconsistent specifications
- Manufacturing capacity constraints
- Port congestion and transport disruption
- Customs delays or incomplete documentation
- Regulatory and product-standard changes
- Currency and commodity-price volatility
- Cybersecurity or information-system failures
- Labour, infrastructure and energy interruptions
- Environmental and social compliance concerns
A simple scoring system can rank likelihood and impact on a consistent scale. High-impact risks should then be prioritised even when their probability is relatively low, particularly where recovery would require a lengthy qualification or import process.
For example, assume a business uses 60 operationally important products and only 30 have approved alternatives. This would indicate that 50% of the assessed range remains dependent on a single approved source. This is an illustrative calculation, but it demonstrates how a basic metric can make concentration visible to management.
Look beyond the immediate supplier
Supplier assessments commonly focus on price, quality and delivery performance. These remain important, but they do not always reveal deeper dependencies.
A supplier may deliver consistently while relying on one overseas manufacturer, a limited number of raw-material producers or a single freight route. If several suppliers use the same upstream source, the buyer may have less diversification than its supplier list suggests.
Questions for critical suppliers should therefore include:
- Where is the product manufactured?
- Are any essential components sourced from a single producer?
- Which alternative facilities could produce the item?
- How long would qualification or production transfer take?
- Which ports, carriers and border processes are normally used?
- What inventory is held at the factory, in transit and locally?
- Which certifications or approvals could delay a replacement source?
- How quickly will the supplier report a disruption?
The objective is not to collect unlimited information. It is to understand the dependencies that could materially affect continuity.
Use early-warning indicators
Risks become more manageable when teams monitor signals before performance fails completely. A useful dashboard may combine supplier, logistics, financial and regulatory indicators.
Operational signals can include:
- Lead times increasing over several orders
- Declining on-time and in-full delivery performance
- Growing defect, rejection or return rates
- Repeated requests to change order quantities or payment terms
- Unusual staff turnover at a key supplier
- Production capacity becoming increasingly constrained
- Longer customs-clearance or port-dwell times
- Expiring permits, certifications or product registrations
- Rapid exchange-rate or freight-cost movements
- News of regulatory, political or infrastructure changes in source markets
Thresholds should trigger specific action. For example, a material lead-time increase could prompt an inventory review, while repeated quality failures could require an audit or accelerated testing of an alternative supplier.
Test logistics and trade exposure
A dependable supplier does not guarantee a dependable delivery. International orders may pass through several organisations and jurisdictions before reaching their destination.
Risk reviews should examine the complete transport chain, including inland collection, export clearance, port handling, ocean or air freight, import clearance and final delivery. Important questions include whether alternative ports or carriers are available, how much extra time rerouting would require and which documents must be corrected if the destination changes.
Documentation deserves particular attention. Incorrect tariff classifications, missing certificates of origin, incomplete commercial invoices or inconsistencies between shipping documents can delay clearance and create additional cost.
Businesses should work with qualified customs and logistics specialists where necessary, particularly when entering unfamiliar markets or handling regulated products.
Assess currency and cost risk
A supplier may remain operational while becoming commercially difficult to use because of exchange-rate movements, freight increases or changes in input costs.
Finance and procurement teams should jointly identify:
- The currencies in which orders and freight are paid
- The period between quotation, order and settlement
- Price-adjustment clauses in supplier contracts
- The proportion of landed cost affected by freight or duties
- Products with limited ability to pass increases to customers
- Approved measures for managing material currency exposure
This assessment should distinguish between temporary price volatility and structural changes that could make a sourcing arrangement uncompetitive. Any hedging or financial instrument should be evaluated with an appropriately qualified financial adviser.
Protect the products that matter most
Increasing inventory across every category is usually expensive and inefficient. A better approach is to determine which products justify additional protection.
Consider an illustrative component costing R80,000 that supports production worth approximately R500,000 per week. If replacement lead time is three weeks, an interruption could place up to R1.5 million of production at risk before recovery expenses are considered. This does not mean the full amount would become a financial loss, but it helps demonstrate why holding a spare or qualifying another source may be commercially reasonable.
Protection measures may include:
- Safety stock for critical or long-lead items
- Approved substitute products
- Framework agreements with secondary suppliers
- Split sourcing between manufacturers or regions
- Reserved production capacity
- Alternative freight routes
- Emergency order and approval procedures
- Local stockholding for selected imported products
The appropriate measure depends on the cost of protection compared with the potential operational impact.
Prepare response scenarios in advance
Contingency plans should describe what happens when a risk moves from possibility to reality. Useful scenarios include supplier failure, port closure, regulatory change, quality recall, freight interruption, currency shock and sudden demand growth.
Each plan should identify:
- Who confirms and escalates the event
- Which orders, facilities and customers are exposed
- What stock is available and where it is located
- Which alternative products, suppliers or routes can be activated
- Which approvals and documents are required
- How customers and internal teams will be informed
- How recovery progress will be monitored
The plan should be tested periodically. A supplier listed as an alternative may no longer have sufficient capacity, while an alternative product may require updated testing or customer approval.
Diversification should be practical
Alternative sourcing is one of the strongest risk controls when it is properly implemented. Deloitte’s 2025 Global Chief Procurement Officer Survey found that 74% of respondents regarded finding alternative supply sources as the most effective mitigation strategy. Greater supply-chain visibility was prioritised by 64%, while 61% focused on supplier information sharing and collaboration. Deloitte 2025 Global CPO Survey
However, adding suppliers does not automatically create resilience. The alternatives must be technically suitable, commercially viable and capable of supplying within the required timeframe. They should also avoid reproducing the same underlying dependency.
For important categories, organisations can strengthen readiness by obtaining sample products, confirming specifications, completing quality checks and agreeing provisional commercial terms before an emergency occurs.
Establish clear ownership and review
Supply-chain risk cannot sit with procurement alone. Operations understands the consequences of product shortages, finance measures financial exposure, quality teams evaluate suitability, and logistics specialists understand route and documentation constraints.
A cross-functional review should therefore examine:
- The highest-ranked risks
- Changes in supplier and delivery performance
- Progress in qualifying alternatives
- Critical inventory and stock-cover levels
- New regulatory or geopolitical developments
- Outstanding mitigation actions
- Lessons from recent incidents
The frequency should reflect the level of exposure. High-risk categories may need monthly monitoring, while stable categories can be reviewed quarterly or at defined contract milestones.
Building earlier visibility with GANS South Africa
The purpose of risk management is not to predict every disruption. It is to reduce surprise, improve response time and protect the products and services that matter most.
GANS South Africa assists organisations with product sourcing, supplier coordination and the development of practical supply alternatives. This can include clarifying requirements, comparing potential suppliers, coordinating product information and supporting logistics planning with appropriate specialist partners.
By mapping critical dependencies, monitoring warning signals and preparing alternatives before disruption occurs, businesses can move from reactive purchasing to a more resilient supply model.
The strongest supply chains are not those that never face disruption. They are those that recognise exposure early and respond with clear information, prepared options and accountable decision-making.
* The statistics referenced in this report are published industry benchmarks and should not be interpreted as guaranteed outcomes. Financial examples are illustrative only. Businesses should obtain appropriate financial, customs, legal, quality and regulatory advice for their specific products and markets.
