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Business Owners – Protect Your Supply Chain!
Featured Best Practice on Supply Chain Resilience
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In such an unpredictable world, with the dangers of an unstable economy, it makes sense to be cautious. To consider the risks is an important factor in any decision, especially when it comes to your business. One break in your supply chain has major repercussions for your entire company. Therefore, it is so important to consider risk management in supply chain. The health and future of your business, and all those who depend on it, is it stake.
In just the last two years, there have been multiple incidents that have had a big impact on the world of business and the supply chains of various companies. For example, the global pandemic had a knock-on effect on many people, financially and personally. In many cases, risks to the supply chain of a company could have devastating consequences on the lives of everyday people. During the pandemic, the frontline workers depended on a constant supply of PPE in order to do their job safely. Recent unrest in countries around the world has already impacted many businesses. All these factors build up and cause problems further down the line. The impact of these problems can be reduced with the assistance of a supply chain risk assessment and when these risks are managed.
We all well know that prevention is better than a cure, and this is no different when it comes to the business world. Being able to pre-empt upcoming dangers gives you the time to take the necessary steps to lessen the effects of a disaster.
Supply chain risk management is the application of various strategies to manage a range of risks along the supply chain with the aim to reduce weaknesses. With a coordinated effort from all of those involved in a supply chain, potential failures can be identified and remedied in advance. The solution depends on the risk, so it will take considerable effort to analyze risks and formulate the best solution for each one. A successful company is one that can adapt to changing circumstances and managing risks is essential to that adaptability.
What Classes As a Risk?
According to one source, a risk is anything, either internal or external, that jeopardizes the potential for a company to achieve its goals and objectives. Risk management is the best way to identify these risks and the consequence that would follow if the event were to happen.
Trust the Process
What is involved in managing risks?
- Identify it.
- Analyze it.
- Evaluate it.
You can gather the information for risk identification in several ways; brainstorm, interview, collect data, do everything it takes to get the information you need to find the problems before they arise. These risks range from natural events (like pandemics and environmental disasters) to security threats. The identification needs to be comprehensive and inclusive, and the information you collect needs to be up to date.
Once you have identified a risk, you need to establish the likelihood of it happened and the impact it would have if it were to occur. Monitor the risk continually. Especially in the turbulent times we operate in, you need to have the most up to date picture of what’s going on in your supply chain.
The final step in managing risks is to evaluate the risk in a quantifiable way so that you make informed decisions. This is most effectively done by evaluating the impact on profit. This will allow you to understand which links in your supply chain you need to focus on.
Technology Is Your Helping Hand
After looking at all the things that can go wrong, it can start to feel overwhelming to manage all the potential risks. There is so much that it is out of your control, and so much that you can’t predict or prepare for. Thankfully, there is technology available to make things easier!
There are several software options available that will automatize the intricacies of the process. Modern software can rapidly gather data from several sources to complete the steps of identifying, analyzing, and evaluating the risks for you. The right software will also offer you lower-risk alternatives. With the software doing the hard work for you, you can concentrate on other tasks and therefore improve your efficiency. With the removal of human error, the results are ultimately more reliable giving decision makers more confidence and knowledge.
There are a great deal of elements that constitute to successful supply chain risk management assessment. Technology plays a role in a considerable number of them, so considering the options in the field of supply chain risk management software (SCRM software) will most likely be the best practice for you and your business.
- Automate the processes that are involved in collecting and analyzing the data from those in your supply chain.
- Use the information you have gathered in the analysis of hypothetical economic issues.
- When problems are detected early, they can be resolved early too. Use technology to identify these problems ahead of time so you can prepare and solve them quickly.
- Combine technology and use it to your advantage. Using both SCRM software and purchasing software together will give you the best perspective when it comes to making financial decisions.
- Use the data that the software has collected to generate visual dashboards that will help you and your team to see real-time data.
Successful risk assessment management is not a one-off task to be ticked off the list. It’s an ongoing, evolving plan that requires constant updating. With so many jobs to do in a company, technology will take one weight off your shoulders and enable you to make the best decisions you can. Knowledge is power, and the knowledge of risks will help you and your business to grow from strength to strength. Reduce your anxiety and stay ahead of your competitors. Have the gift of foresight with the software that will enable you to prepare for any bumps in the road of success.
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Supply Chain Management (SCM) is the design, planning, execution, control, and monitoring of Supply Chain activities. It also captures the management of the flow of goods and services.
In February of 2020, COVID-19 disrupted—and in many cases halted—global Supply Chains, revealing just how fragile they have become. By April, many countries experienced declines of over 40% in domestic and international trade.
COVID-19 has likewise changed how Supply Chain Executives approach and think about SCM. In the pre-COVID-19 era of globalization, the objective was to be Lean and Cost-effective. In the post-COVID-19 world, companies must now focus on making their Supply Chains Resilient, Agile, and Smart. Additional trends include Digitization, Sustainability, and Manufacturing Reshoring.
Learn about our Supply Chain Management (SCM) Best Practice Frameworks here.
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About Shane AvronShane Avron is a freelance writer, specializing in business, general management, enterprise software, and digital technologies. In addition to Flevy, Shane's articles have appeared in Huffington Post, Forbes Magazine, among other business journals.
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