Supply chains are the backbone of businesses. Effective management involves the flow of goods, right from storage to customers, and holds the key to revenue growth. Therefore, it is essential for businesses to prepare for any risks -- such as natural disasters, acts of war, theft, data breaches, or supplier bankruptcy -- that may disrupt their supply chains. Let’s look at some innovative tools that are effective in mitigating risks.
● BitSight Discover (helps businesses map their digital supply chains)
● Riskpulse (provides environmental risk management solutions)
● IBM AppScan (delivers code verification solutions)
Businesses must develop contingency plans to cushion the impact that such disruptions could have on the bottom line. We are listing the top 10 tips to help companies do just that.
Evaluate and identify current risks: It is important to take a critical look at the business and identify some possible high-risk events. Because the first step to being prepared is being aware of possible dangers.
Prioritize by probability and impact: It is impossible to cover every scenario. That’s why it’s crucial to prioritize potential risks by predicting their impact on finances and brand image, probability of occurrence, or both. Once this has been prioritized, contingency plans can be worked on accordingly.
Ensure supplier quality: Suppliers can hugely impact a company’s reputation. In addition to ensuring the quality of supplier goods, be aware of the source of materials and communication with all stakeholders. It is important to ensure long-term supplier viability to avoid any future complaints regarding quality.
Diversify suppliers: Depending on a single supplier is not advisable. It is wiser to source from low-cost locations around the world and establish reliable secondary suppliers in different regions to minimize the risk of delays.
Be aware of suppliers’ risks: It is crucial to be aware of all types of risks the suppliers face -- be it compliance or political/economic conditions that may impact their ability to serve.
Include partners in risk planning: It is important to work with suppliers, transportation carriers, data management centers, and customers to create a disaster recovery and business continuity plan that aligns with the supply chain.
Purchase cargo insurance: Insurance is mandatory to protect in-transit shipments as well as warehoused goods against loss or damage anywhere in the world, whichever carrier or mode of transportation.
Be transparent with partners: Ensure consistent and clear two-way communication among stakeholders, especially around issues such as increased sales projections or major changes in the product.
Consider trade credit insurance: Slow-paying or no-paying customers can impact working capital. Trade credit insurance can help protect the bottom line, free up some capital, and help secure better financing options from lenders.
Review risks periodically: In order to avoid risks as much as possible, review risk scenarios regularly and identify changes in the supply chain.
It is important to be a step ahead and have a contingency plan. These ten strategies can help businesses tide over crises and mitigate unforeseen disruptions. What’s more, technology has made it easier to follow these processes and model key risk scenarios.
At H&S, we balance sustainability and profitability by building future-ready 4.PL solutions. We work with innovative technologies such as electric vehicles, blockchain, and AI to create a digital supply chain. We also utilize techniques such as the weighted distance traveled method to optimize the use of transportation.