Importance of Supply Chain Risk Management
In many ways, your supply chain is like the circulatory system of your business. The supply chain is the web through which your company takes its products and services and ensures they find their way to your end customer. It’s a complex, and often complicated, system that can make or break the success of your business. This is why it is no surprise that it is so crucial to make sure everything keeps moving.
Despite this importance, many people don’t necessarily understand how supply chain management actually works. Just as it’s vital to have check-ups and do all the right things to keep your body healthy, the same is true for your supply chain. This comes in the form of supply chain risk management. To ignore the importance of supply chain risk management is to put the well-being and future of your company at stake. This is what you need to know to safeguard your supply chain in both the physical and digital spheres.
Why is Supply Chain Risk Management Important?
Sometimes, it may appear as though supply chain risk management is a buzzword. Everybody seems to be talking about it, but that’s only because it’s so important. This is true for startups as well as established businesses with long histories of success. Whether your business is looking to make your supply chain more efficient and streamlined, or you’re proactively hoping to avoid potential problems in the future, supply chain risk management is a necessity for your business in the digital age. In fact, a survey by Deloitte found that 85 percent of global supply chains experienced some form of disruption in the last year.
Pay Close Attention to Each Step of Your Supply Chain
Supply chain risk management is about more than dealing with problems when they arise. It’s about proactively measuring potential risk and addressing your plan if and when a problem should occur. Frequently, supply chain risk management entails four specific processes. These fundamental processes are as follows:
However, even when properly applied, these processes may not be enough to adequately protect your supply chain from potential risk. Because of this, it is imperative that your company trusts a partner that is going to apply a holistic approach to supply chain risk management. By looking at the supply chain as a whole, and identifying the possibility of potential problems, you can prevent disruptions to your supply chain before they happen.
Expect the Unexpected in Your Supply Chain
Your supply chain is a large, constantly shifting operation with many moving parts. Because of this, it’s important to understand that anything can, and often does, happen. These disruptions can run the gamut from suppliers being unreliable or delivering products you didn’t order, to having your entire supply chain sidelined as a result of a natural disaster. Even the way the wind is blowing in the world of politics can have a serious impact on the supply chain.
By instituting a supply chain strategy that has already incorporated risk management into its plan, a company can be sure that it has done everything it can to protect itself, its supply chain, and its customers from disruptions due to outside influences. But this is only one facet of the importance of supply chain risk management. There’s more your supply chain at risk than physical threats. There are digital disruptions to worry about, too.
Supply Chain Risks are Digital as Well as Physical
Increasingly, supply chains live just as much in cyberspace as they do in the physical world. This growth and increased application of technology has helped to take the supply chain to new heights. That said, this dependence on technology also comes with its own risks.
Cybercrime costs companies billions of dollars each year. Businesses must keep suppliers and everyone at each step of the supply chain informed of the potential risks. That means ensuring that suppliers and shipping partners are operating on secure networks that you and your customers can trust. This often means directly asking your supply chain management partner if they are applying proper risk management procedures to your product. By working with a supply chain management company that proactively builds risk management into its approach, companies are better prepared to protect themselves, their customers, and their investments.
Nexterus Provides Comprehensive Supply Chain Risk Management
As more businesses look toward trusted advisors to manage their supply chains, it becomes all the more important to confirm the importance of supply chain risk management is a part of that service. Supply chain management with Nexterus incorporates secure, proprietary software to streamline and simplify your supply chain. Through its strategic approach to supply chain management, companies can be confident in knowing that their supply chains are effectively optimized and managed.
While the idea of supply chain risk management can seem daunting at first, it is one of the most valuable components of any supply chain management system. Through the increasing popularity of logistics and supply chain partnerships, more entrepreneurs are investing in logistics franchises to better serve this ever-growing need in a multi-billion dollar business.