Resilience and Risk Management in the Modern Supply Chain

Follow @SamJermy and @SupplyChainD on Twitter.

Running a business is a naturally risky proposition. Though many aspects of the marketplace will inevitably remain beyond control, the one thing that can be controlled is the reduction of exposure to risk within various areas of an operation, including the supply chain.

Effective supply chain risk management programs recognise things will not always go according to plan and help build a more resilient business in response. This involves assessing current risk factors and developing strategies to manage them.

The risks of supply chain disruptions, to both revenue and reputation, are not limited to first-tier suppliers and customers. The ability to access information from every part of the trading network in real-time can help businesses identify and anticipate risks, as well as inform the range of decisions needed to mitigate them.

That visibility fuels the approach behind collaborative planning and execution; bringing together all the people, processes and technologies to identify and resolve supply chain disruptions before negative impacts take hold.

Knowing all possible sources of risk will allow businesses to ask the right questions and be better prepared for the unexpected. The following are three ways a company can improve its risk management capabilities and trading partner network.

Right Level of Visibility

The most successful programs are designed to function end-to-end- all the way from supplier constraints to customer demands. It is critical to have complete visibility across all data at multiple tiers of the supply chain.

Partial visibility will give just that: a partial view of the problem, often requiring manual intervention to pull second-tier and third-tier information together. When resolving problems, many companies waste more than half of their time correlating the timing and quality of external data sources. By the time that monumental task is complete, it’s likely that the problem has already changed.

With profits and customer satisfaction hanging in the balance, companies can’t afford to waste much time resolving parts shortages, logistics disruptions, or changes in demand.

With the right technologies, expertise, and a commitment from senior management in place, businesses can reap the full benefits of outsourcing and globalization, as they can see the “big picture.”

Enable Real-Time Collaboration

Once visibility is established, the next step involves external collaboration. Without collaborative capabilities, companies are forced to depend on contingency plans in isolation from their key suppliers and distributors.

In the event of large-scale shutdowns or inventory losses, the ability to know sooner and collaborate in real-time will enable a company to switch among alternate suppliers and match short-term demands with order information. This strategic timing advantage is what squarely puts a business ahead of the competition, as that organisation can more adeptly change course armed with better information.

Whether it is a flood, tornado, or a sudden dip in demand, macro-environmental variables constantly threaten the integrity of supply chains. Real-time visibility and collaboration across the global trading network will put a company in the best position possible to detect and resolve disruptions based on the most current, complete information.

Collaborative Planning for Smarter Resolutions

When one part of the supply chain is disrupted, the negative effects can ripple across an entire trading network. To minimise the impact of such a disruption, it is critical to identify and resolve exceptions before profitability or service levels are compromised, which takes real effort and advance planning.

Because supply chain disruptions cannot always be predicted or prevented, preemptive measures are needed. Collaborative planning and execution allows businesses to resolve supply chain disruptions with the collective intelligence and reach of their entire trading network. This unified view will allow to expedite, transfer, or re-route existing assets to wherever the current demand exists.

While some risks are unavoidable, they can be intelligently managed with the help of the right technologies and information systems. Today’s risk management tools are enabling responses to real problems and providing an information and communication platform to manage situations as they happen.

However, in today’s complex world of outsourced manufacturing, traditional planning tools simply aren’t up to the challenge. For optimal control within an extended trading network, multi-enterprise solutions with access to data across the network are critical to future success.