The world is quickly changing, and with these changes comes new potential risks that can affect your global supply chains. An easy way to ensure your supply chain is protected is through effective management—but effective supply chain management has to first begin with a supply chain risk management plan.
A supply chain risk management plan is a strategy used to predetermine any possible incidents to minimize disruptions to the supply chain if they were to occur. Risks can stem from previous learned experiences or from common industry incidents. The most common risks to a supply chain include regulatory impacts such as trade deals, natural disasters, worksite malfunctions, raw material shortages, safety recalls, use of third-party suppliers, or COVID-19.
Companies who have solid supply chain risk management plans in place are able to quickly and effectively respond to changes in demand and can actually increase their profits. But plans can shift—so, where to start?
First, it’s important to understand that no two plans are alike. Your supply chain risk management plan may look very different from another organization because each organization faces its own risks. That leads us to ensuring all conceivable risks are mapped out and assessed. Once this takes place, you can develop your supply chain risk management plan.
Start with Your Managers
Companies should meet with senior managers to discuss overall company strategies. By aligning your plans with all department leaders, you can easily gain the support of all employees and even customers. Remember, supply chain management decisions often directly impact company goals, leading supply chain goals to become integral to a company’s overall success.
Do Your Research
Take into account the areas of the supply chain process that will affect performance. Those include technical improvements, the competition, the needs of customers, transportation, sustainability practices, and most importantly, third-party suppliers. Third-party suppliers can make or break your business. To set your suppliers up for success, you can do the following:
Create a list of qualified alternate suppliers
Develop communication protocols with critical and major suppliers (first thru fourth-tier suppliers)
Assess and qualify all suppliers
Provide suppliers with proper tools and resources to do their jobs safely and correctly
Develop a Way to Implement the Plan
A challenge with devising a supply chain risk management strategy is deciding how to best implement the plan and ensure that all steps are integrated and communicated effectively. Companies can use supply chain risk management software like the Avetta ConnectTM platform to assist with performance and success. There also needs to be frequent communication and training with supervisors and employees on all levels.
It is critical to review your plan on a regular basis and make adjustments when necessary. Your suppliers may change, along with the markets in which they work and serve. It must be adaptable, and that requires frequent revisions.
Companies must be prepared at all times and in all sections of the business—even one small disruption to a supply chain can have a detrimental ripple effect and impact all areas of business.