Managing Inbound Supply and Outbound Distribution Risks

On 28 March 2026, Nestlé announced that 12 tons of KitKat bars had been stolen enroute from Italy to Poland. The company said that it had decided to go public to highlight the increasing trend of cargo theft.  

While the so-called “chocolate heist” generated much mirth online, it is a reminder that even the biggest companies with massive global supply chains are not immune from disruption. 

Supply chain operations are of course vulnerable to global events, such as the current conflict in the Middle East, the Red Sea crisis, or the pandemic. 

Most events that disrupt the flow of goods are prosaic. These range from factory fires to port congestion; chemical spills; equipment failures; weather disruptions, and so forth. 

These are not headline news stories. Instead, they are events that supply chain planners, procurement professionals, and logistics managers deal with every day. 

Manufacturers rely on the timely arrival of goods, whether they are raw materials, components, or intra-company transshipments of work-in-progress. Late inbound deliveries upend production schedules, which in turn disrupts the final distribution of goods to customers. 

Profitability rests on your ability to make sure that goods are where they need to be, when they need to be there. 

It is no wonder that McKinsey & Company found that companies lose 45% of one year’s profits over a ten-year period because of supply chain disruption. 

Tackling Inbound Supply Risks 

The foundation of any manufacturing operation is its inbound supply chain. One way to safeguard your supply chain is by stockpiling inventory. However, it is not possible to have large buffer stocks of every component.  

A failure to secure inbound materials leads to unplanned production downtime, which carries financial consequences. Siemens estimates that production downtime costs the world’s largest 500 companies as much as 11% of their annual revenue every year. 

A second more sustainable way of reducing unscheduled downtime is by managing supplier risk.  

Supplier Risk Scoring 

Understanding supplier risk begins with risk scoring. During a supplier’s onboarding phase, you will have performed due diligence checks for issues such as financial health, product quality, and compliance with various regulations. 

These reviews do not consider the physical locations of their manufacturing sites. Where a factory is situated plays a significant role in how likely they are to experience different kinds of disruptive events. 

Disruption is often location-based. As a result, comparing suppliers across different dimensions of risk can seem like a complex task.  

How do you compare a supplier in an area that has a risk of hurricanes with one located in a country where labor strikes are common? Is it less risky for you to work with a supplier in an area prone to earthquakes, or a supplier in a country that has a poor record of worker protection? 

Risk scoring helps you assess supplier vulnerabilities. Building a strategic risk scorecard starts with an assessment of which external risks are relevant to your supply chain.  

From there, automated external risk scores are assigned and weighted according to their relative priority. Where relevant, internal risk assessments and third-party data can be layered in and weighted accordingly. This gives you a 360° view of supplier risk. 

By gaining visibility into the potential risks a supplier could introduce, you can make proactive sourcing decisions that reduce exposure. You can also manage inventory levels across different suppliers depending on the likelihood of disruption. 

Furthermore, you can use scenario planning to create disruption management plans. This will reduce the need for reactive crisis management down the line. 

The goal is not to eliminate all possible risks. Rather, you need to know what they are, and if they are risks you are prepared to accept. 

Supplier Monitoring 

After you have risk assessed your suppliers, you need to monitor them for threats that could impact your operations. 

Ongoing monitoring acts as an early warning system. The sooner you know about a potential threat, the sooner you can act to avoid it, or mitigate its impacts. 

Another benefit is your ability to share these insights with your supplier. This can foster more transparent relationships. For example, if you receive an alert about a fire at a Tier-2 supplier, you can let your Tier-1 supplier know. By giving them early warnings into disruptive events, you will help them to increase their own resilience.  

Figure 1: Inbound goods can be disrupted by issues both big and small, from conflict to factory fires. 

Mitigating Outbound Delivery Risks 

Successfully manufacturing a product is only half of the equation. The other is delivering it to the end customer on time and in full. Outbound distribution faces a unique set of logistical challenges that can erode profit margins and destroy customer trust if not properly managed. 

Research by DP World found that more than half of companies around the world over a month’s worth of operational capacity because of disrupted logistics.  

The threats are varied. From geopolitical tensions closing waterways and border crossings; equipment failure; labor strikes; port congestion; infrastructure collapse; cybercrime; and extreme weather. 

However, many types of logistics risk are predictable if you are monitoring your supply chain. For example, weather is one of the most disruptive yet predictable disruptions for logistics. Using applied meteorology, weather risks can be predicted up to 15 days in advance along your shipment route. You can use this to plan around disruptive weather events, or to select the right equipment for moving temperature-sensitive goods. 

Some events are harder to predict, but early notification allows you to anticipate their cascading effects. Wildfires, for instance, follow known seasonal conditions yet strike without precise warning. By monitoring an active wildfire path, you can foresee likely road closures or airport disruptions before they occur. 

Similarly, if labor negotiations at a port are deteriorating, you can infer that a strike is possible and reroute shipments in advance. This first-mover advantage lets you secure alternative services before demand drives prices up, allowing you to stay ahead of disruption while competitors are still reacting. 

Figure 2: Like procurement, logistics is subject to a wide range of risks including regulatory changes, strikes, weather and accidents. 

Getting Started with SCRM 

Treating inbound procurement and outbound logistics as isolated operational silos is a fundamental mistake. A delay in inbound materials inherently threatens outbound delivery commitments. Similarly, inefficiencies in outbound logistics can cause warehouse bottlenecks that force production slowdowns.  

Transitioning from a reactive, firefighting approach to a proactive, risk-optimized strategy yields substantial dividends. Organizations that invest in supply chain visibility and risk management consistently outperform their peers in both profitability and reliability.  

 While average organizations often take weeks to identify impacted materials and execute a response following a major disruption, companies equipped with real-time intelligence can secure alternate sources and implement contingency plans days before their competitors even recognize the threat.  

This first-mover advantage is crucial when securing limited alternative freight capacity or secondary supplier inventory. 

Having said that, very few organizations start their supply chain risk management journey by managing both inbound and outbound risk together. Most begin with by tackling the most pressing problems in one area. This allows you to demonstrate value quickly and build momentum for a broader SCRM rollout across different departments.  

If you would like to see how Everstream Analytics could help you manage inbound supply and outbound distribution risks, contact us for a demo.