Zach Zacharia on 3rd Quarter Supply Chain Outlook

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In this episode of Lehigh University’s College of Business ilLUminate podcast, host Stephanie Veto talks with Dr. Zach Zacharia about the ever-changing landscape of supply chain and the Lehigh Business Supply Chain Risk Management Index third quarter report. 

Dr. Zacharia is an associate professor of supply chain management and director of the Center for Supply Chain Research at Lehigh. He teaches graduate and undergraduate courses in supply chain operations management and logistics and transportation.

Dr. Zacharia is starting a new project on trusting AI information in the supply chain. Interested participants can reach out to him at zgz208@lehigh.edu. 

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Below is an edited excerpt from the conversation. Read the complete podcast transcript [PDF].

Veto: You launched the Lehigh Business Supply Chain Risk Management Index or LRMI in August 2020. That was almost five years ago. 

For anyone that's not familiar with it, can you give a high-level overview of what this index is?

Zacharia: We launched that in 2020 to help supply chain professionals understand, monitor and maybe benchmark risk across 10 key categories. Each quarter, we have supply chain professionals rate the expected change in risk for each category. They go from does the risk increase, stay the same or decrease?

The index ranges from zero to 100 with 50 representing no change and numbers above 50 signaling growing risk. So, in a way, it's a decision support tool. 

At least it gets an idea for which areas across the supply chain are increasing in risk. And so that gives a greater understanding for people in the industry to be able to sort of make decisions.

Veto: Second quarter results showed that the supply chain risk was at its highest level since the LRMI began. It rose over 13 points from the first quarter. How does this third quarter index compare to the second?

Zacharia: We’ve never had a number that high, because nine out of the 10 risk categories increased. In quarter three, there has been a significant decrease in that eight out of the 10 risks declined, but the average risk just went from 72 to 70.32. 

Overall, the trend is now reducing risk. In a way, it reflects that there's still a lot of risks, and so we're over 70. But in some sense, I think because the risk is decreasing, it suggests that maybe companies are getting more familiar with what's happening in the business environment, and they're able to sort of plan for it.