How to Identify Supply Chain Risks to Avoid Disruptions
Posted by Fazal Sayyed
Several firms have been shaken in the past few years by unanticipated supply-chain vulnerabilities and disruptions, resulting in recalls costing hundreds of millions of dollars in industries ranging from medicines and consumer products to electronics and autos. It is critical to address the risks and employ the proper tactics, and the first stage in any risk management approach is to identify and mitigate particular supply chain potential risks.
1. Cyber Security:
Since a few years ago, data breaches and the expenses connected with them have grown, but a research from 2021 indicates that the average cost per breach climbed from $3.86 million in 2020 to $4.24 million in 2021.Solution:
In addition to putting strict cybersecurity procedures in place inside your own company, it's crucial to ensure that your suppliers are doing the same. Only let those who really need access to your systems in, and invest in reliable technology and trustworthy personnel to keep you secure online. Ensuring secure online supply chains is the best way to ensure your data and applications are safe.
2. Financial Risk:
Financial supply chain risk is the chance that suppliers will run into a situation at work that endangers their financial stability. A multitude of monetary risks are associated with supply chains, and accounts payable and procurement must control their exposure and corporate effect.Solution:
By gathering and archiving all expenditure data in the cloud and offering complete integration of all value chain-relevant data in a single location, we can increase transparency while giving all stakeholders fair, role-appropriate access. Removing internal and external data silos that might hinder cooperation and decrease the usefulness and accuracy of analytics in making wise judgments.
3. Sourcing Risk:
Companies required enhanced insight into the local or regional supplier ecosystem through analytics or the usage of a digital procurement platform to establish connections with such secondary suppliers during the time of pandemic creating shared resource pools for raw material inventory is one strategy that huge corporations have often used in previous crises.Solution:
Decision-makers can consider how much, if any, flexibility their top suppliers have to shift production to other locations by analysing information from those suppliers.
4. Supplier Consistency:
Only 45% of suppliers can continue to operate following a crisis. Any danger that materialises may cause a disruption in supplier consistency. Supplier consistency applies to manufacturers as well. Raw and recycled materials are vulnerable to disturbance.Solution:
Procurement departments must shoulder the whole weight of guaranteeing supplier consistency. This is made feasible by establishing a varied supply network. Shippers should also broaden available carrier routes to accommodate changes in suppliers.
Supply-chain risks may look unavoidable but the right strategy will assist you in efficiently managing possible risk, recovering from any disruptions, and achieving long-term growth.