Four Key Steps for Successful Supply Chain Risk Management

Posted by Ankit Kohli on November 3rd, 2016

With today’s unpredictable market, it makes sense to know how to efficiently and properly mitigate risks to make sure that your supply chain can thrive and perform well. Effective supply chain risk management ensures a systematic approach to identifying and addressing risks in your supply chain. Knowing the risks and being able to avoid or minimize them are keys to successful supply chain risk management. Proper management is recommended if you are globally expanding. It can help you prevent delays, disruptions, and costly mistakes. Here are four key steps to ensure a successful way to manage your supply chain:

1. Gain deeper visibility into the extended supply chain - In ensuring successful supply chain risk management, you need to look beyond your critical suppliers and focus on N-tier suppliers, too. Doing so should let you see key risk and performance indicators, which you should monitor to avoid surprises. Keeping an eye on tier two, three, and four suppliers allows you to stay aware of potential risks that could come from them.
2. Develop a systematic approach to addressing supply chain risks – Seasoned providers of supply chain risk management services start by mapping and identifying interdependencies in the N-tier supply chain by collecting information from critical suppliers and analysing that information. Then, they map potential risk areas by looking up countries and markets that have a sizeable impact on your extended supply chain in every procurement category. That way, they can determine key risk indicators for every category and monitor them. Risk indicators are monitored using a category intelligence framework, so you should be able to monitor crucial risk indicators that are associated with every procurement category.
3. Shift your focus beyond financial risks – Some companies make the mistake of looking only at suppliers who are at risk for financial trouble, but other factors like geopolitical, operational, sustainability, macroeconomic, and market-related risks must be considered, too. All these can play a part on how a supplier will do in your supply chain.
4. Work with a reputable supply chain risk management provider – Monitoring your supply chain can be challenging and time-consuming, so it is best to leave that to experts who can understand the probability and depth of the risks. These professionals consult industry experts for further insights and on-ground intelligence that can help your business, too.

About the Author:

Pure Research Private Limited (Pure Research) provides customised research and business intelligence to leading corporates, public sector organisations, financial services firms, and professional services firms. The company specialises in providing high quality procurement and supply chain intelligence to CPOs and procurement professionals worldwide. Analysts from Pure Research work as an extension of its client’s procurement teams to deliver high quality insights on suppliers and supply markets. The company has offices in London, U.K. and New Delhi, India.