Supply Chain Process – Workshop 8 (Risk Analysis)
Executive Summary Video
The Appleton Greene Corporate Training Program (CTP) for Supply Chain Process is provided by Mr. Hendricks MBA BA Certified Learning Provider (CLP). Program Specifications: Monthly cost USD$2,500.00; Monthly Workshops 6 hours; Monthly Support 4 hours; Program Duration 12 months; Program orders subject to ongoing availability.
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Learning Provider Profile
Mr Hendricks is a Certified Learning Provider (CLP) at Appleton Greene and he has experience in production, management and globalization. He has achieved a Masters’ of Business Administration, a Bachelor of Business Administration and is Certified in Production and Inventory Management. He has industry experience within the following sectors: Aviation; Aerospace; Automotive; Transport and Logistics. He has had commercial experience within the following countries: United States of America, or more specifically within the following cities: Ann Arbor MI; Detroit MI; Toledo OH; Cleveland OH and Cincinnati OH. His personal achievements include: developed strategy trained associates SAP; facilitated improvement scrap rate; implemented lean manufacturing processes; improved cycle count accuracy and JIT sequencing supplier. His service skills incorporate: SAP implementation; master scheduling; inventory management; work management and performance optimization.
MOST Analysis
Mission Statement
The lack of a robust process for identifying, prioritizing, managing and mitigating risks is a clear threat to an organization’s supply chain and its strategy. A systematic risk assessment becomes even more important as an organization decides to compete globally and/or to expand its supply chain to other countries and regions. Unfortunately, without a crisis to motivate actions, risk planning often falls to the bottom of the priority list.
Objectives
01. Critical review of Global Supply Chain Risk: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
02. How Global Supply Chain Risk has evolved over the years; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
03. Core characteristics of Supply Chain risk; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
04. Risk assessment process in Global Supply Chain; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
05. Common risks involved in Global Supply Chains; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
06. Understanding Supply Chain risk management; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
07. Understanding supplier profiles: departmental SWOT analysis; strategy research & development. 1 Month
08. Mitigating transport and logistic risks in a Global Supply Chain: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
09. Practical approaches to build risk resilience: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
10. Best practices for Supply Chain risk management: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
11. Mining for potential Global Supply Chain threats: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
12. Risk and compliance in the global economy: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
Strategies
01. Critical review of Global Supply Chain Risk: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
02. How Global Supply Chain Risk has evolved over the years: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
03. Core characteristics of Supply Chain risk: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
04. Risk assessment process in Global Supply Chain: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
05. Common risks involved in Global Supply Chains: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
06. Understanding Supply Chain risk management: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
07. Understanding supplier profiles: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
08. Mitigating transport and logistic risks in a Global Supply Chain: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
09. Practical approaches to build risk resilience: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
10. Best practices for Supply Chain risk management: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
11. Mining for potential Global Supply Chain threats: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
12. Risk and compliance in the global economy: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
Tasks
01. Create a task on your calendar, to be completed within the next month, to analyze Critical review of Global Supply Chain Risk.
02. Create a task on your calendar, to be completed within the next month, to analyze How Global Supply Chain Risk has evolved over the years.
03. Create a task on your calendar, to be completed within the next month, to analyze Core characteristics of Supply Chain risk.
04. Create a task on your calendar, to be completed within the next month, to analyze Risk assessment process in Global Supply Chain.
05. Create a task on your calendar, to be completed within the next month, to analyze Common risks involved in Global Supply Chains.
06. Create a task on your calendar, to be completed within the next month, to analyze Understanding Supply Chain risk management.
07. Create a task on your calendar, to be completed within the next month, to analyze Understanding supplier profiles.
08. Create a task on your calendar, to be completed within the next month, to analyze Mitigating transport and logistic risks in a Global Supply Chain.
09. Create a task on your calendar, to be completed within the next month, to analyze Practical approaches to build risk resilience.
10. Create a task on your calendar, to be completed within the next month, to analyse Best practices for Supply Chain risk management.
11. Create a task on your calendar, to be completed within the next month, to analyse Mining for potential Global Supply Chain threats.
12. Create a task on your calendar, to be completed within the next month, to analyse Risk and compliance in the global economy.
Introduction
Introduction to Global Supply Chain Risk Analysis
Risk assessment and analysis in the supply chain is a necessary evil today. Organizations have to ensure that they have all corners covered and are ready for the complications involving these processes. This introduction will take you through all that you should know to learn more about risk in the global supply chain, and the issues it can lead to.
Risks in the supply chain have evolved to become even more prevalent and common with time. The risk management strategies that businesses implemented and followed in yesteryears have failed to stack up in this day and age. The policies of days gone by have failed to maintain their efficacy during these modern times, and businesses now have to improvise and adapt to the changing environment.
No type of provider can avoid the risks of a global supply chain today. Even with the growing addition of security across the supply chain, risks exist across ocean, land and air freight. These risks are often unavoidable and inevitable for global supply chain businesses, since there is no way around them.
Definition of Risk
Traditionally, risk has been defined as an amalgam of two factors – a particular hazard and the chances or likelihood that the hazard will occur. To simplify this definition, risk is the probability or likelihood that a hazard such as financial fraud will occur inside a business.
As per environmental and human rights terms, this definition of risk translates into identifying all environmental and human rights violations that can result through a supply chain including pollution incidents, forced labor, and coming up with a probability for their likelihood.
Going by these terms, risk can be considered theoretical, and something that has a negative impact, which can potentially damage a business and hasn’t yet happened.
The aim behind risk assessment processes in the supply chain is to identify all potential sources of risk in the supply chain and to grade or prioritize them on the basis of their importance. As studied in previous sections, the importance of risk is evaluated and determined on the basis of the impact that the risk carries. The aim of risk management, on the contrary, is to reduce the likelihood or probability of these hypothetical problems and ensure there aren’t any roadblocks along the way. It is necessary for all supply chain stakeholders to have a clear understanding of the risk assessment and management processes. Where risk assessment deals with prioritizing, assessing and grading risk, risk management deals with managing and mitigating their impact. Risk assessment puts down the foundation for what’s to follow during a typical risk management process.
Who Is at Risk?
There are many areas of risk inside an organization. These areas can have different impacts, often leading to complications in revenue generation and profitability. There are many areas of risk, with the greater ones leading to a loss of business, financial failure and major interruptions to operations in a number of different ways.
When it comes to human rights and sustainability risks, the discussion hovers around the impact the risk will have on the outside environment and the reputation of the supply chain and parent organization. While organizations often look through the lens of profitability, they have now realized the importance of providing friendly working conditions to workers and practicing sustainable measures for protecting the environment from the perils of industrial smoke and transportation inefficiencies.
Risk Assessment and Compliance
A publication released back in 2011 by UNGP provided businesses with a framework they should follow for not only understanding their own responsibilities, but to also come up with a plan to mitigate and minimize the likelihood of risk. Human rights risk assessment is of great concern to the United Nations and was highly emphasized in the document.
When it comes to human rights risks, organizations should run consultations with all business stakeholders and determine strategies to combat risk. Stakeholders such as business partners, communities, employees, NGOs and even trade unions can share valuable insights into the process of policy making and setting the right course for risk management.
The UNGP made it clear within this document that the primary responsibility of ensuring human rights lies with the State. The private sector should uphold and comply with the laws mentioned by the State and should also be responsible toward respecting and promoting human rights. Private sector entities should realize the negative attributes that come with their management styles and what can be done to limit them.
Compliance with the laws and regulative measures is necessary, but it isn’t the only thing organizations are required to do today. Organizations in the business world today are required to also maintain a strict code of conduct, based on which they perform in a particular manner toward employees and the environment.
Most developing countries have concrete laws in place for risk management but lack the steps that should be taken here. The lack of proper steps and decision making can lead to companies exploiting labor and not giving human rights the importance they should be given. Companies have a responsibility of their own as well and should go beyond simple legal compliance to remain on the right side of ethics and the law.
Common Worker Rights and Environmental Risks Ignored by Supply Chains
There are a number of sustainability and human rights issues that businesses today can focus more on. The UNGP has termed the risks below to be the most salient ones and has crafted a policy to ensure businesses comply with risk management in this regard.
Fundamental Labor Rights
Workers suffer during the non-implementation of fundamental labor rights. The inability to provide these risks can land supply chains in hot waters.
Rights violations made here include:
• Forced labor
• Child labor
• Discrimination in employment toward people of a particular religion or caste
• Lack of respect for worker freedom and unions
Working Conditions and Remuneration Risks
Obviously, employees need to be given feasible working conditions to work in and should also be given the wages and remuneration they require. Risky violations that shouldn’t be made here include:
• Wages below the minimum wage level decided by the governing organizations
• Excessive hours of work
• Abusive treatment leveled toward employees for no violations as such
• Health and safety breaches
• Lack of access to the grievance mechanism
• Abuse of contracts
Social and Economic Rights Violations
These risky violations are mostly leveled on communities near the supply chain and manufacturing unit. The inability to address these violations can leave organizations with lasting repercussions, along with a supply chain that may never recover.
The risk factors involved in these violations include:
• Noise and air pollution affecting the local population in a specific area
• Emissions impacting the local water supplies or an improper drainage system
• Road transportation methods that create traffic constraints and lead to challenges
• Land grabbing activities without proper legal compliance
Civil and Political Rights Violations
Violations of civil and political rights are conducted by global supply chains and operators on communities and their own employees. These risk factors are a show of power and limit the voices against regressive policies.
Violations that can lead to this risk include:
• Preventing workers from forming unions and being part of unions together
• Collaboration within companies and security forces to repress community complaints against regressive measures
• Bribery and land grabbing policies
Sources of Risk
Risk can come at you from multiple sources or dimensions. Obviously, it is very hard to manage or determine where risk is coming from, but a simple grouping can help you determine the course of action.
For supply chain managers, the sources of risks are of key importance. These sources are a major part of the risk and need to be fully minimized or mitigated if a strategy is to be prepared. Sourcing your risks and being prepared for them can also lead to the aversion of possible dangers that result because of the risk.
Also, risk categories and sources aren’t meant to be exclusive. This means that the category basically operates as a tag or a label and that the risk in question can have more than one tag. In short, most risks are generated through inefficiencies in multiple sources and not just one.
Typical risk categories include:
• External
• Internal
• Project
• Product
• Technical
• People
• Organization etc.
External Risk
An example of an external risk for a global supply chain operator would be a supplier missing their deadline and delaying the shipment that they have to provide. These delays cannot only lead to customer retention issues, but also signal problems in revenue generation. However, since supplier delivery timelines are often out of the organization’s control, there isn’t much that can be done about them.
This is something that we discuss in greater detail within the rest of this chapter as well. Supplier relationships are a key part of averting supply chain risk, and with good relationships, organizations can mitigate and minimize the chances of risks.
Internal Risk
Internal risk factors come to the surface during change management. Change is a major part of supply chain progress, but can be really complicated for global operators to manage. Signaling a change in global sourcing and procurement patterns can lead to implications.
To take an example of internal risks, a management that isn’t involved in the organization’s transformation process will see a number of risks during the implementation of an Agile framework. These risks are however linked with internal management and external forces cannot be blamed for them.
Project
Projects can often act as sources of risk as well. Projects are a major part of every supply chain today and need to be managed carefully for the right results. Project managers should be involved in the process, so that the backlog items are ready for the next iteration. Failure to keep a check and balance on the project can lead to delays and backlog creation for the next iteration.
Product
Risk can also come through the final product being offered to customers at the end of a supply chain. All marketing attributes related to the product should be finalized and managed in a decent manner to manage the risks involved with them. If the product owner isn’t involved and sets either price, product, promotion or location wrong, the product is bound to suffer.
Technical Risks
With the higher dependency on tech solutions in the supply chain, there are a growing number of technical risks involved as well. Technical risks make management difficult and can lead to massive downtimes if your management team and the tech team aren’t well equipped in the processes that they should follow for risk mitigation.
In short, the greater an organization’s reliability on tech solutions, the higher will be their chances of falling for technical risks. Automated solutions do make global supply chain processes easier, but they also come with their own perils in the way.
People
The people employed in a global supply chain also carry their risk. Global supply chains are stringent in their hiring procedures and hire the crème de la crème to represent their business. This is because people play an important role in not only mitigating but managing risk as well.
Training is an important part of the process here, where employees are trained to follow best practices in the industry and to ensure that they are up and available whenever the need be. If recruitment fails to rope in the best candidates and does not improve the pipeline, performance is bound to suffer.
Organization
The management and organization of processes is also a key factor in determining and dictating risk. The organization of key resources can either increase or decrease risk, based on the reaction to it.
We will look at the sources of risk and the common risks found in supply chains in greater detail in the coming chapters.
Time-Based and Situational Characteristics
Changes in situations and time periods can often result in a number of new risks. If we look at situations, it is a key characteristic for risks to pop up during change. The changing of team members, the undergoing of a major reorganization process, the changing scope of a project and the enhanced use of technology are all factors that can contribute and lead to risk. Change management is hence extremely important and helps steady the ship during times of turbulence.
Time-based risks can also pop up in a global supply chain. Time-based risks are certain risks that repeat themselves at particular times. For instance, the time during the start of a project or a new chain is often considered the riskiest. This time period comes with certain risks of its own and can be difficult to manage for managers or professionals involved in the process. The risk then diminishes along as the project moves forward and the impact reduces.
Interdependence
A core characteristic of risk is to have a domino-like impact on organizational processes. Many tasks and deliverables within a global supply chain are dependent on each other. A certain risk endangering the delivery of one shipment or one batch can accumulate and have a cascading impact on all other tasks as well. The result could be similar to a domino effect with lasting repercussions.
Risks are also known to be magnitude dependent. As we studied earlier, a higher impact can increase the magnitude of a risk as well. To explain this through a simple example, take up the choice of investing $1 for a 50/50 reward of $5 versus the risk of investing $1000 for a 50/50 chance of winning $5000. Obviously, the latter is a lot more complicated and riskier because the opportunity cost is higher.
History of Supply Chain and Risk Resilience
The roots of both operations research and industrial engineering can be found in logistics and supply chain-oriented research patterns. Frederick Taylor, who is accredited with writing The Principles of Scientific Management, back in 1911, is considered to be the father of both operations research and industrial engineering. The research conducted by Fredrick Taylor was inspired by logistics, after his early life experiences as a manual loader.
Operations Research gained precedence when scientists and innovators demonstrated just how useful analytics could be in studying and solving key military logistics problems. The complex requirements of the World War II required new innovations and strategies in military tactics, which is where these advancements came in particularly handy.
While both Industrial Research and Operations Engineering have been maintained separately, both these factors have found their best success when used together in the supply chain. The integrated framework used in global supply chains of today is the amalgam of both operations engineering and industrial research. This integrated framework helps address logistics and supply chain issues, while providing feasible conclusions and solutions for everyone involved.
This amalgam of engineering with operations planning is known as the supply chain engineering approach and is a major part of the supply chain today.
Supply Chain Management in the Early Years
Back in the early 1940s and 1950s the focus of most research conducted in logistics was on the use of mechanization. Mechanization processes such as pallet lifts and pallets were becoming increasingly common during the period, and research was focused on improving the tiring labor intensive processes in logistics, and to find a better racking and layout technology that would utilize space. The lack of technology and the extreme reliance on manual labor meant that racking and utilization of space in the warehouse was an integral issue in the supply chain process.
The ‘unit load’ concept gained particular popularity during this period, with readers and aficionados of the supply chain. The use of pallets became common with the rising popularity of the unit load concept. The concept of unit load and pallets was even extended to transportation management in the 1950s, with the innovation and development of containers for trains, trucks and ships. Although, supply chain globalization actualized much later, the founding stones had been set during these decades and the progress was evident. While these advancements and processes are termed as ‘material handling’ and ‘warehousing’, it is best to include the functions under fundamental and core application of industrial engineering, rather than creating an entirely new discipline.
The arrival of the 1960s saw a clearer trend towards the use of trucks in the transport networks. While rail tracks were previously used for shifting more time-dependent freight transport, trucks provided a more lucrative, efficient and easy to manage alternative. This alternative greatly enhanced with the growing infrastructure of highways, filling stations and logistic points in developed countries. The inclusion of trucks in local transport led to the much-needed development of a separate segment known as physical distribution.
The National Council of Physical Distribution Management was formed in 1963 to focus the attention of supply chain stakeholders and governments towards this field. The interest showed by governments was followed with enhanced academic research and education. This academic research satisfied the growing needs of this paradigm change.
The addendum of technology in 1970s opened the doors to a completely new era of supply chain management and technologies. Where all record keeping and communication was done manually between supply chain stakeholders, computers provided an easy solution for everyone. The addition of technology, especially the computer and later the internet, led to an efficient inventory mechanism with optimized truck routes.
The transition from theory to the practice of technology took time and effort for many supply chain providers. In the late 1970s, the supply chain industry saw the formation of the Material Handling Research Center, the Georgia Tech of the Production and Distribution Research Center and the Computational Optimization Center. Each of these centers was operated with a focus on understanding and simplifying the solutions offered by computer technology. The end objective was to make the transition to computers easier for all involved.
Coming of Age for Logistics
The 1980s was the decade of change for logistics and the relevant supply chain management details. The emergence and widespread adoption of personal computers in the 1980s had led to the provision of better computer access to all planners and executioners involved in the supply chain.
The Production and the Distribution Research Center was an early innovator in this regard as it helped spread a flood of technology. It was during this time that flexible spreadsheets and map-based interfaces were huge improved and implemented in the supply chain. The Material Handling Research Center had also largely settled into its role and initiated major tech upgrades in the material handling and automation process.
The Computational Optimization Center developed a number of new and implementable algorithms that initiated and highlighted solutions for airline scheduling problems. Much of all the innovations and methodologies unearthed in these centers made its way to the commercial technology of that era.
Perhaps the biggest trend in favor of logistics in the 1980s was that the industry had finally started getting the recognition it deserved. Logistics was now considered as a very important, very complex and extremely expensive process to manage. And, with the growing drive for picking out all inefficiencies in the chain, executives and organizations sat down to become aware of logistics as an area that presented immense opportunities for them to improve. The bottom line was that executives and decision makers in supply chain firms realized that there was great potential for them to work on logistics and improve the experience that they offered in this regard.
Realizing this very fact, the National Council of Physical Distribution Management changed its name to CLM or the Council of Logistics Management in 1985. The reason they gave for this new name was: “to reflect the evolving discipline that included the integration of inbound, outbound and reverse flows of products, services, and related information.” Prior to this move, logistic as a term was strictly limited to military movements, but it had now made its intro to the expansive world of supply chain.
The Technology Revolution
The logistics boom of the 1980s was fueled further in the 1990s by the emergency of ERP or Enterprise Resource Planning Systems. ERP systems were motivated by the success of the Materials Requirement Planning systems of the past and acted as an upgrade over the previous system. These ERP systems opened the doors to a number of innovations and upgrades in the field of global supply chain technology.
The Material Requirements Planning Systems were developed back in 1970s and were partly replaced due to the intrinsic need for more automation and partly due to the fear that these systems will not be able to manage the dates that come with the start of the 20th Century.
Despite the complications and the issues that came with the widespread implementation and installation of ERP systems, most major supply chain players had these systems installed by 2000. The move to ERP systems resulted in a tremendous improvement with data availability and accuracy modules. This improvement was achieved through the ability of ERP systems to provide and update accurate information at all hours. The new ERP software also dramatically increased the need for more integration across all components and stakeholders of the supply chain. This recognition eventually led to the creation of APS or Advanced Planning and Scheduling software operations.
Globalization in the Supply Chain
The widespread recognition and use of the term ‘supply chain’ is owed primarily to the globalization in manufacturing since the start of the 1990s. The growth and globalization of the supply chain was achieved through manufacturing processes and the brilliance of China in providing the world with easy to source products. United States imports from China grew from some $45 billion during the year 1995 to over $280 billion per year in the year 2006. The growing focus on globalization also highlighted the need for global strategies with effective communication standards to be formed within stakeholders. This accented the need for an internet model that connected suppliers with customers and helped in the efficient communication of needs and demands. The growing association of supply chain management with the strategies in play within logistic was accented through the decision of the Council of Logistics Management to change its name to the Council of Supply Chain Management Professionals back in 2005.
The organization made the distinction that, “Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers’ requirements” while “Supply Chain Management is the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole.”
The internet can be accredited for playing a vital role in the widespread adoption of global supply chain strategies. The internet not only improved communication between global partners, but also helped in the accuracy and provision of data to all partners.
Future of Supply Chain and Logistics
Ever since first being implemented in the 1980s, computer technology has advanced at a phenomenal rate of knots. The technology we have today is far ahead than what most supply chains in the global market have plans to utilize. Given just how many internet users access the internet today, one finds it hard to fathom that Internet Explorer – Microsoft’s first internet browser – was initially launched in 1995.
The communication capabilities highlighted in the previous section as well have changed the way supply chain partners deal with each other. The distributed collaboration and team work we see today is definitely a harbinger of good times to come, where an efficient supply chain would greet us every time we talk about the global sphere.
There are modern implementations of the global supply chain in areas such as healthcare and humanitarian logistics, which require technology to become even more proficient and better. Technology and implementation does come with risk, but as we have learnt from the history of the global supply chain, tech risks have almost always paid off.
Understanding Supply Chain Resilience
The onset of the COVID-19 pandemic has led to a lot of talk over the supply chain resilience and how global firms try to operate, even with the restrictive measures in place across the world during the year. However, not many readers are able to interpret just what it actually means.
Supply chain resilience is the ability of a global supply chain to power through unexpected events and be prepared for them. A resilient supply chain has the ability to respond to uncertain and unexpected events that damage the flow of information across the supply chain. An organization with a resilient supply chain can not only respond well to disruptions, but also recover well from them, eventually returning back to the original condition it was in when the disruption started. Not only this, but truly resilient supply chains can return back to an even better performance level after a disruptive global event has transpired.
The COVID-19 pandemic has been nothing short of a complex change for the entire globe. Not only has it disrupted our style of living, but it has also shaken the business world as a whole. Companies today find themselves in a precarious situation with their legs within rough tides.
As most supply chains try to cope up with the relentless pressure of logistics during the pandemic, other more resilient supply chains have used years of practice, implementation and technology to power a remote style forward.
Smart Strategies to Build Supply Chain Resilience
Many C-level executives today have cited risk management as one of the biggest challenges facing supply chain and procurement teams. Businesses are exposed to supply chain risks in ways more than one, and only a resilient supply chain can survive and prosper. Based on the consistent pace at which risks around us have evolved and become even more complicated, it is even more necessary for organizations to build a resistant logistics method.
Some strategies to build supply chain resistance in the world today include:
Knowing the Risks of Each Supplier
Every supplier brings with them a certain set of risks. These risks often deal with the geographical distance between the customer and supplier, the lack of communication or any other related cause. Knowing the presence of risk in supplier relationships, organizations should understand what risks come up with all suppliers. They should also comprehend the significance of supplier risks, and the likelihood or chances of offsetting them. When organizations and global supply chains of today understand the common risks associated with global suppliers, they can take proactive measures to not only mitigate the damage, but to also make a stitch in time and save themselves from future predicaments.
Supply chain managers should drop the ‘tick-box’ mentality and go for a progressive and mature approach toward selecting suppliers. Your supplier should be capable of managing threats and counterproductive events and should have multiple streams or passages to get your raw materials to you.
Talk to Suppliers
There is no way for suppliers to get a hold of your expectations without a proper communication channel. Set clear expectations from the very outset and encourage proper dialogue and communication with your suppliers. The presence of a communication channel can help build mutual confidence and trust within suppliers, while minimizing the chances of any surprises.
Also communicate your concerns to suppliers, where and when you detect a certain risk. Consult them on what can be done to improve the situation, without giving the impression that you’re looking for means to bait out of the deal. Suppliers often hide certain risks in a bid to keep a contract. Give suppliers the confidence they need and work with them for the betterment of the deal.
Study the Long-Term
Supply chain planning and strategies have to be focused on the long-term. Reactive responses, inappropriate short term cash flow strategies and just-in-time procurement methods combine to form an increasingly short-sighted plan of progress. These short-term incentives do add a shiny layer of efficiency, but they also open organizations up to a heightened threat of risks. You can flip this around by reviewing geo-political and global threats and also asking suppliers to deliver a transparent model. Keep reviewing possible threats in the supply chain and improve them for all parties involved.
Learn and Adapt to Evolve
Projects go wrong, technologies can backfire, disruptions can lead to downtime, but through all this a resilient supply chain should continue to flow and evolve. Rome wasn’t built in a day and similarly your resilient supply chain will take some time to shape up, however you can start the process toward that overnight by implementing an attitude of learning, adapting and evolving.
Start by creating a knowledge base of best practices and benchmarks followed by others. Implement these changes across the organization and look at what can be done to drive the chances of future success.
Adopt Emerging Technologies
Organizations can also improve their supply chain resilience by adopting futuristic technologies with solutions for disruptions in the future. A remote supply chain collaboration model between all stakeholders, including customers, wasn’t implemented by many global supply chains. The implications of the COVID-19 pandemic have found all such organizations wanting and have clearly displayed the efficacy and preparedness of organizations with a remote model
The use of tech solutions can enable businesses to survive during tough times, without disrupting their business reserves.
Always Look Ahead
Keeping the current scenario in perspective, sales and demand figures are bound to bounce back when the pandemic and its repercussions subside. Supply chains should already be picking up the pace to prepare for this surge in demand for when the pandemic ends. An increased demand will require the most out of the supply chain, which is why processes should be oiled and fine-tuned in time.
Risk has evolved drastically over time and is present at the center of all supply chains. However, better communication with suppliers and a decent understanding of your weak points can drive resilience forward.