Managing supply chain risks begins with understanding the complete supply chain cycle, from raw materials to manufacturing goods to delivering products to customers. In each of these cycle steps, there are opportunities to improve efficiency. In this new blog series, we will cover key parts of your supply chain risks and provide strategies to help mitigate them.
Upstream Risks: What to Consider and Mitigation Strategies
Assessing your upstream supplier risks is a great place to start when it comes to supply chain risk management. A recent write-up from Travelers provides an excellent overview of some key supplier risks to consider and offers tips to address them.
Avoid single supplier dependencies, which can leave you vulnerable and limit your options when addressing a supply chain problem.
Consider natural hazards, such as hurricanes, earthquakes or other weather-related events. A lack of preparedness for these events can create shortages, escalating bids and disappointing buyers. Be sure to study the weather patterns in your suppliers’ regions to stay in the know for when these hazards may strike.
In a similar vein, political and geographical risks are also critical to consider when dealing with suppliers. It is best to stay abreast of both international and domestic trade regulations as well as any changes that may come to them.
As our reliance on technology continues to grow as the years go on, cyber risks have never been more important to consider. In fact, supply chains are among hackers’ favorite targets to attack due to the devastating consequences that can ensue. You should gain a complete understanding of how a cyber attack could impact your business, how weaknesses are exposed in manufacturer supply chain networks and consider how a cyber attack could impact upstream suppliers.
As more advanced technologies become available, counterfeit components can become an issue. Ensuring enhanced quality control and counterfeit detection measures are in place can help reduce liability. Review and approval of suppliers’ quality control processes should occur regularly.
Contract negotiation with suppliers should involve risk transfer to reduce your organization’s liability. Effective negotiation can help your organization limit common product or operational liabilities.
Want to Learn More?
Turning your supply chain risks into advantages is key to staying ahead of the curve. Adapting strategies for the future of work, supply chain resilience, and digital maturity can help companies keep pace and drive performance amidst economic demand. Talk to your trusted RCM&D advisor today for more on supply chain risks, and be on the lookout for our next blog in the series covering the importance of key employees and training.