Supply Chain Risk Mitigation: 8 Tactics Every Business Needs
Several risks can cause expensive and reputation-ruining problems for your organisation – but help is at hand! Here are 8 sure-fire ways to avoid them
Through proven supply chain risk mitigation strategies, organisations can better identify and mitigate the risk present throughout its supply chain. The following risks can cause a variety of expensive and reputation-ruining problems such as:
- Lower quality products and services
- Unsafe practices and increased health and safety incidents
- Business interruptions
- Harmed reputation
- Fines for non-compliance
- And more
Avoiding these problems is vital when it comes to success and every business should use the following eight tactics in order to stay on top.
1. Critique Your Risk Exposure
Perform supplier audits, run through potential supply chain disruption scenarios, and identify areas of risk. Does any part of your supply chain have political or geopolitical, weather-related, regulatory, or labor market risks? What reportable incidents have your suppliers had in the past? How do you know if your suppliers and their workers are qualified? Do they have the experience, capacity, and tools required?
Take a free risk assessment to uncover hidden areas of liability. You can’t improve what you don’t know.
2. Prioritise Potential Risks
Your supplier risks should be prioritised by the probability that they will occur. Then, each should be analysed for the financial and brand impact that could occur if the risk is realised. Begin mitigating your most likely and highest-impact risks and then work your way down the list.
3. Ensure the Quality of Each Supplier
Conduct research to prequalify each supplier. You should be critiquing their:
- Quality of goods
- Source of materials
- Employee management
- Partner interaction
- Financial verity and stability
4. Establish Diversified Suppliers
Source primary and secondary suppliers from various global locations so that your supply chain doesn’t become vulnerable to weather, labor, political, and economic events. Be aware and stay on top of any potential changing risks (including regulatory compliance).
5. Plan for Risk
Once you know the various risks, plan ahead for them. Involve partners in supply chain risk mitigation planning. Include and involve your:
- Suppliers
- Transportation carriers
- Data management centers
- Customers
6. Verify and Monitor Insurance Coverage
In addition to ensuring you have your own insurance needs met (including cargo insurance and trade credit insurance), ensure your suppliers have the insurance they need as well. This is made easier when you have a single repository. This is where all supplier insurance documentation is saved so insurance professionals can review and confirm that the proper types and levels of coverage have been acquired, and client-defined limits have been accurately met.
7. Be Transparent and Share Information
You want to make sure your suppliers have correct and up-to-date information regarding sales projections and dropping forecasts. This will allow you to work together to foresee issues, solve potential problems, and reduce any fallout.
8. Regularly Review Your Risk
Any change in your supply chain can cause a chain reaction and either increase or decrease your risk in any area. Because of this, periodically reviewing your risk scenarios will help you prepare and protect. Additionally, analysing real-time data will give you the capability to address urgent business questions and demands.
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