Risk has always been part of the supply chain. It’s a reality inside and outside the four walls of any organization. They have naturally addressed with anticipated and unanticipated events occurring both upstream and downstream in the supply chain.
Upstream of an organization are the suppliers who create goods and services used in a company’s own operations.
The downstream supply chain efficiently distributes a company’s products or services to its customers.
All contracted suppliers, both upstream and downstream, must be proactively managed to minimize financial, confidentiality, operational, reputational and legal risks. Ideally, if the risk is properly managed, nothing occurs that has a negative impact on operations or profitability
Therefore, the objective of procurement and supply chain leaders should be to create a secure but high-performing supply chain. One in which risk can be minimized while value-added business relationships can flourish. Think of it as “intelligent risk management.”
Five techniques towards “intelligent risk management” across the supply chain.
Technique 1: Innovation and efficiency in contracting management
Technique 2: Strategic requirements for supplier insurance and limitations of liability
Technique 3: Provider optimization and redundancy
Technique 4: Supplier financial stability visibility
Technique 5: Proper diligence in operational supplier assessment reviews
Using these five Supplier Risk Management Techniques is a solid starting point for building a supplier supply chain that can greatly contribute to your organization’s overall organisation strategy. Obviously, this is only the tip of the entire supplier relationship management iceberg; however, it is a huge improvement over the typical methodologies used by far too many companies to manage supply chain exposure.