Top 10 tips: Mitigating supply chain risk | by Cliff Jacob

Cliff JacobSupply chain risk comes from many areas, including natural disasters, acts of war or terrorism, supplier bankruptcy, theft, damage and data breaches. Companies must develop plans to prepare for, and help reduce, the impact that disruptions can have on their bottom line.

Here we provide the top 10 tips for how to mitigate supply chain risk.

1. Evaluate and identify current risks
Take a critical look at your business and identify areas with risk exposure. Identify and evaluate potential supply chain disruption scenarios.

2. Prioritise by probability and impact
Covering every scenario is impossible, so prioritise potential risks by the likelihood of them happening. Then estimate the financial and brand impact of each event. Develop mitigation contingency plans, starting with the most likely and highest-impact risk scenarios.

3. Ensure supplier quality
Suppliers can impact your company’s reputation. In addition to ensuring the quality of suppliers’ goods, be aware of how they treat employees, source materials and interact with other partners. Conduct financial due diligence to ensure long-term supplier viability.

4. Diversify suppliers
Don’t rely on one source for materials or products. It’s desirable to source from low-cost locations around the world, but if goods can’t be delivered in a timely manner, your supply chain becomes vulnerable. Establish reliable secondary suppliers in different regions to minimise this risk.

5. Be aware of suppliers’ risks
Be aware of risks your suppliers may face, including regulations compliance, country risk, economic and political conditions, or anything that may impact their ability to serve you.

6. Include partners in risk planning
Work with suppliers, transportation carriers, data management centres and customers to ensure they have disaster-recovery and busineTop10RiskTipsss-continuity plans that align with yours. Involving them in risk-management planning reinforces their importance as a partner and elevates their role in risk mitigation.

7. Purchase cargo insurance
Insurance is important in many facets of life. It should be just as important in your supply chain. Start by understanding that carrier liability is not insurance. Then find a cargo insurance provider that can protect in-transit shipments, as well as warehoused goods, against loss or damage anywhere in the world, no matter the carrier or mode of transportation.

8. Be transparent with partners
Share information, such as increased sales projections, and include partners in product-design changes. This helps suppliers have the right product available when needed. Similarly, if sales forecasts drop, let partners know that, too. They’ll appreciate the heads up, and it’ll strengthen your relationship.

9. Consider trade-credit insurance
Slow-paying or no-paying customers can really impact working capital. Trade-credit insurance can protect your bottom line, free-up capital and help secure better financing options from lenders.

10. Review risks periodically
Review risk scenarios regularly and identify changes in your supply chain. Preparation is the best way to protect your company from a supply chain disruption.

From supplier to manufacturer to retailer and logistics, there are keys to optimal supply-chain management. Leading practices necessitate knowing the state of your inventory. You must develop as much information as possible. If you aren’t aware of the problems in your supply chain, then you may risk damage to your company and alienate customers whenever products aren’t available.

Cliff Jacob is a Senior Associate at Bespoke Group. He is also an accredited counsellor and life coach and an expediting specialist -

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Posted on October 08, 2018