APICS is the premier professional association for supply chain management.

New Threats in Supply Chain Risk Management

by APICS CEO Abe Eshkenazi CSCP, CPA, CAE | N/A 2012 | 0 | 0

APICS Operations Management NowExploring this week’s news, our team uncovered a disturbing theme__supply chain risk is everywhere.

Take, for example, an article from this week’s Economist titled “Black Gold on the Black Market.” The article describes how in 2011 outlaws stole 3.35 million barrels of fuel, worth about $1 billion, from Mexico’s state-run oil company, Pemex. Thieves take it from trucks in the desert and siphon it from exposed pipelines. And the problem is getting worse. Last year, Pemex detected 1,324 taps. That’s double what it was in 2010.

Stolen oil that is refined can be sold to drivers on Mexican roadsides. Crude oil and natural gas condensate get smuggled into the United States and refined here. The Economist reports that Pemex is working through the US court system to prosecute companies that sell the stolen fuel. “To stamp out oil theft, Pemex will have to be as aggressive inside Mexico as abroad. The company has hired more security staff, invested in monitoring technology, and won stiffer penalties for robbers.” 

In China, Bloomberg reported a different kind of supply chain threat—counterfeit drugs. Police there arrested more than 1,900 people and seized $182 million worth of fake drugs. It is unclear whether the counterfeit drugs were meant for the Chinese or international market. According to the US Centers for Disease Control (CDC), counterfeit (or fake) drugs are manufactured using incorrect, inactive, or harmful ingredients. These drugs are then packaged and labeled to look like real brand-name and generic drugs to deceive consumers into thinking that they are buying real drugs.

According to the CDC, “Counterfeit drugs present a worldwide public health problem that is difficult to measure … The World Health Organization estimates that 10 percent to 30 percent of medicines sold in developing countries may be counterfeit, and some studies conclude that the percentage may be even higher. The problem appears to be far less common in the industrialized world, where estimates suggest fewer than 1 percent of medicines sold are counterfeit.”

While the stories come from different areas of the world and involve dissimilar products, there is commonality related to their supply chains and the professionals who manage them. There is no doubt those professionals continue to gather and review risk mitigation and management strategies.

Think about the risks to the supply chain with which you work: transportation failure, supplier breakdown, inclement weather, licensing and regulation issues, major quality lapses, loss of customers, or the theft and vandalism outlined previously. Now consider the steps of a risk management framework as they are defined in the APICS Operations Management Body of Knowledge Framework:

  1. Identify the sources of potential disruptions.
  2. Assess the potential impact of the risk.
  3. Develop plans to mitigate the risk.

Do you have all the necessary skills to properly create a risk management framework? Do your supply chains demonstrate the necessary responsiveness, agility, and efficiency to optimally operate in today’s complex environment? APICS now offers a comprehensive, forward-looking program that will prepare professionals to lead risk management activities or participate in the development of global risk mitigation strategy. The APICS Risk Management certificate is awarded to supply chain and operations management professionals who have participated in a 12-hour risk management program delivered in conjunction with APICS conferences and educational events. Find out more information about this important new offering by visiting www.apics.org/risk

Idea exchange

 Now, you can take the APICS Operations Management Now discussion to your social networks on LinkedIn, Facebook, Twitter, and the APICS Supply Chain Channel. Be sure to use the hashtag #OMNow and include @Tweet_APICS in any tweets to have your words featured on the APICS homepage.

  • How do you protect against theft in your supply chain?
  • Are counterfeiting or fake goods problems for your supply chain? How do you verify the integrity of products and raw materials?
  • How large is the risk management function at your organization? What about for the supply chain? Has the issue of supply chain security become more important recently? 
In other news

Related APICS education

All comments will be published pending approval. Read the APICS Comment Policy.


  1. RadEditor - HTML WYSIWYG Editor. MS Word-like content editing experience thanks to a rich set of formatting tools, dropdowns, dialogs, system modules and built-in spell-check.
    RadEditor's components - toolbar, content area, modes and modules
    Toolbar's wrapper 
    Content area wrapper
    RadEditor's bottom area: Design, Html and Preview modes, Statistics module and resize handle.
    It contains RadEditor's Modes/views (HTML, Design and Preview), Statistics and Resizer
    Editor Mode buttonsStatistics moduleEditor resizer
    RadEditor's Modules - special tools used to provide extra information such as Tag Inspector, Real Time HTML Viewer, Tag Properties and other.