Things That Organisations Should Know About Supply Chain Risk Management

Things That Organisations Should Know About Supply Chain Risk Management

Supply chain risk management (SCRM) is the efforts that organisations make to help them detect, monitor, and mitigate threats to their supply chain. An efficient supply chain risk management plan takes the following elements into account: 


Trading Partners 

Partners include carriers, suppliers, service providers, technology services and other services that can access your private information. Issues arising from suppliers include their location, the safety of their facilities and employees, insurance and safety of the plants and the operators. Many organisations only have gleams of their multi-tier supply chain issues and do not know their susceptibilities. 


Quantifying Risks 

Some risk models miss the point by dwelling too much on the likelihood of events. There are various reasons for failing which are hard to predict. However, you need to understand the impact of risks. What cost will you incur if you do not receive the material? There may be many reasons such as port delays or bad weather. Understanding the causes will help you later as you try to reduce the risk. Understanding the impact can help you to prioritise the areas to work on. Regardless of the reason, the cost remains the same. Your continuity plan should work on the impact as opposed to the cause of the risks. 


Supply Continuity 

Once you the risks and potential impacts, you should put in place methods for mitigating the risk. You can then change your sourcing strategy, supplier inspections, and systems for automating data collection. Re-examining your inventory and transport policies will help to assure the correct buffer stocks and more consistent shipments. This has to be flexible, as the conditions keep changing. 



Organisations must make sure that they and their partners comply with the applicable laws. Unfortunately, many companies tend to think that regulations only apply to others. It is not easy to understand each regulation, but if you ignore this element, your company may find itself avoided by big customers or worse.

Date: 28 September 2018, 11:09 am
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