In the past ten years, many businesses have experienced unanticipated supply-chain risks and interruptions that have resulted in recalls that have cost hundreds of millions of dollars in various sectors, including medicines, consumer products, electronics, and automotive. Additionally, several public and commercial organizations have had cybersecurity breaches, losing crucial intellectual property due to flaws in the supplier ecosystem.
Effective supply chain risk management helps companies of all sizes to benefit from tried-and-true tactics that reduce risk and position them for success. It is helpful to comprehend the potential risks associated with your supply chain before creating your risk management approach. Below is how to identify and reduce supply chain risk:
Create Supplier Diversification
Utilizing a single supplier concentrates risks, and any problems with that supplier are likely to affect your supply chain as a whole.
It is possible to expand your supplier base to spread risks out and decrease their effects. Your supply chain’s robustness can be improved by expanding your supply network.
To prevent your supply chain from being susceptible to weather, labor, political, and economic crises, you should source your main and secondary suppliers from various international regions. Be mindful of any potential shifting hazards (such as regulatory compliance) and keep up with them.
Information Exchange
Ensure your suppliers have accurate and current information about sales and declining forecasts. This will enable you to cooperate to anticipate issues, address prospective issues, and lessen any negative effects.
For instance, railways can provide instant information to travelers through the PNR Status, which allows travelers to get details of the reservation status. Additional services provided by the Indian Railways is Train Between Stations to look at live train status.
Enhancing Supply Chain Visibility
Every operational level in your supply chain likely contains a variety of risks. If something were to go wrong during one of these steps, the last thing you would want to happen is to discover problems later in the production process, or even worse, right before the completed good or service is delivered to the customer.
The earlier you identify any problems, the sooner you can address them, avoid having the supply chain disrupted or delayed, or have them have an adverse impact on the quality of finished goods or services. Therefore, regarding risk mitigation, supply chain visibility is crucial.
Embrace a Culture of Risk Awareness
When it is a team effort, supply chain risk management is much simpler and easier work. By fostering a culture of risk awareness, you can guarantee that all employees and collaborators associated with your production flow uphold the highest risk management standards, lowering the possibility of supply chain disruption.
Adopting training resources, promoting open communication, and establishing clear standards and benchmarks ensures that your supply chain complies with regulatory requirements and supports your risk mitigation efforts.
Review Your Risk Periodically
Your supply chain risk management strategies will only be productive if they’re current and pertinent to your supply chain operations. Therefore, performing a risk assessment just once is insufficient. Supply chain risks must be reviewed regularly to ensure that control mechanisms and prepared reactions to various scenarios are still applicable.
Any modification to your supply chain could set off a cascade of events that would raise or lower your risk. Therefore, regularly examining your risk scenarios will aid your preparation and protection. Additionally, you can respond to pressing business issues and requests by analysing real-time data.
