Thursday, September 29, 2022
spot_img
HomeSupply ChainsSupply Chain Risk Management Is More Important Than Ever

Supply Chain Risk Management Is More Important Than Ever

The COVID-19 pandemic over the last few months has helped to uncover many vulnerabilities and weaknesses of all types or organizations around the world.

The pandemic has been a catapult event that forced many industries to rethink and transform their global supply chain model. A small percentage of firms have put a supply chain risk management plan in place throughout the last few years. Fast forward to today and its no surprise that the number of companies who have done so has increased drastically. The global market is more volatile and competitive than ever and the demand for products has only grown as margins on the other hand continue to shrink.

A supply chain risk management plan is a strategy to speed up response to as many unforeseen circumstances as to minimize disruptions to the supply chain processes.

This ranges anywhere from natural disasters, theft, supplier delay, production interruptions, and even cyber security. While these risks may be common and happen more frequently, other risks may appear less prominent yet are just as equally destructive. These include areas such as changing market conditions, the competition gaining market share, operating at lower costs, or even as far as evolving customer tastes.

Freight and Logistics is subject to extreme supply chain risk.

One of the more critical components of any supply chain risk management is to analyze transportation and routes. Freight is vulnerable to all kinds of risks, from weather-related events to infrastructure outages. Just as with the other supply chain risk preplanning, assessing risks with shipping is the first step, followed by quantifying those risks. Assigning number values helps to make data useful in that it can be analyzed to build contingencies.

Technology has the capability to continually pull large amounts of data from multiple sources in real time, and also present it in a visual way to give companies an “easy overlook” – the probability of those risks during every leg of the journey, and the severity of them. Data output can be customized to answer specific questions and identify current problems and potential issues. For example, what are the risks to each shipment from the time the goods are packed onto trucks, railcars, airplane or ship until they make it to their final destination? How likely are those risks and what would their impacts be? And, how would we respond in each case?

With the right data at the right time, people have the ability to make the right decisions.

No matter the type of supply chain, risks can be avoided or, at least minimized. Companies not only have the ability to save costs in the long-run but also can ensure on-time delivery to maintain customer satisfaction.

RELATED ARTICLES

Latest News