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Organizations are always at risk for losses through cost volatility, supply disruption, non-compliance fines, and safety incidents that cause damage to their brand and reputation. Knowing what’s at stake is the first step to understanding, measuring, and managing risk in your supply chain.
Among the highest priorities for companies across all industries, safety concerns are often magnified in chemical, oil and gas, construction, and manufacturing. Workplace accidents can jeopardize contracts, result in fines, and cause significant damage to a company’s reputation.
Do your vendors and suppliers meet your standards for quality and consistency? Customers are quick to react when they perceive a drop in quality; and, even the smallest product issues can be difficult to recover from.
Any disruption to the supply chain due to financial challenges has the potential to impact business continuity and, ultimately, your bottom line. Taking a proactive approach to understanding supplier financial strength can prevent disruption and unnecessary costs.
Are your contractors insured? Do they have the right type of insurance, the right limits? Knowing this information will help you to manage insurance risk and avoid potentially costly litigation.
Damage to a company’s brand or reputation can be long lasting, extremely costly, and sometimes unrecoverable. Committing to a supply chain risk management strategy can not only prevent brand damage but can also serve to foster new partnerships with organizations that share like values.
It’s no longer enough to assess risk within the traditional construct of a supply chain. Organizations must look beyond and consider environmental impacts and corporate social responsibility, including adherence to labor laws and sustainable practices.
Mitigating risk in the supply chain starts with the procurement process and is dependent on having an effective methodology for evaluation. When managing contractor and supplier relationships, loss control or risk mitigation is most effective when you can Communicate, Evaluate, Select, and Monitor:
Communicate expectations. Before you award the contract, ensure that you detail safety expectations in your contract with the supplier or contractor in mind.
Evaluate progress. Use objective criteria and both leading and lagging indicators, like Experience Modification Rate (EMR) and Total Recordable Incident Rates (TRIR) to determine how the contractor’s performance is measuring up to stated expectations.
Select contractors based on qualification standards. Once you have established the criteria against which contractors will be evaluated, be clear that all elements of qualification will be weighted and that price is not the only factor on which they will be judged.
Monitor contractors using a real-time database. Enforce company-wide standards by keeping a database of all contractors in a regularly updated format.
Instant access to prequalification information for your entire supply chain.
Minimize supply chain risk with in-depth supplier audits for safety, quality and sustainability.
Take control of your supply chain with employee-level qualification and training.
Simplify your management of insurance risk with a centralized repository for all supplier insurance certificates.
Get complete visibility of your supply chain and the answers you need to make better business decisions.
"Avetta gives us proactive risk management. We're able to leverage the expertise and experience that Avetta provides based on years of tracking and evaluating contractors."
Do you know where the exposure is in your supply chain? Do you have a process in place to prequalify contractors, regular reporting and evaluations? See where your strengths and weaknesses lie by taking our FREE risk assessment test. Just click below to get started.
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