If you have or manage a company, the supply chain network is no doubt central to its success, no matter the niche. For companies in manufacturing, e-commerce, and processing lines, the supply chain is even more critical.
Therefore, interruptions on the supply chain can have serious implications, at times resulting in regulatory issues, legal challenges, delays in production, loss of market, the danger of closure, and even expensive product recalls. These are issues you do not want to face, which is why you should have a comprehensive supply chain risk management program.
To draw the best supply chain risk management program, the first step is to understand the involved risks. This post provides a comprehensive supply chain risk assessment checklist that you can use in your organization.
Identifying the Main Supply Chain Risks
The first step to installing a good supply chain risk management is identifying the potential risks. Indeed, there is a long list of things and issues that can impact the smooth operations of your supply chain. So, let’s start our supply chain risk assessment checklist by identifying them. Note that the risks can be internal or external.
● Business risks: These can range from the disruption of your business staff operations, software operations, and reporting
● Planning challenges: Most of these risks are related to poorly planned processes and inaccuracies in business operation forecasting
● Mitigating risks: These risks mainly emerge when risks in the supply chain happen, but your business does not have a contingency plan or the one available is not adequate.
● Demand risks: Often, these risks are associated with incorrect calculations, perhaps from overestimation, resulting in oversupply.
● Supply-related risks: This challenge arises from issues related to poor supply of raw materials or products to stock in your facility.
● Environmental risks: Most of these are unforeseen environmental issues that can cause disruptions in the supply of raw materials or finished products. All about climate risk reporting here.
● Supplier-related risks: If the suppliers you rely on have issues, such as financial flow challenges or ethical problems, there is a risk of not getting the supplies or correct ones. The problems could even result in serious damage to your brand image and loss of market.
Supply Chain Risk Assessment : Managing Supply Chain Risks
Identifying or anticipating the risks is only the first part of your supply chain risk assessment checklist, but what do you do with them? You need to have a clear strategy for management and mitigation (all about GRI Standards). .
To do this, it is paramount to acquire the right supply chain risk assessment program and work with a professional. Visit Diginex.com for some of the best programs and professional assistance. Here are crucial steps for managing your supply chain risks:
● Perform regular supply chain risk assessments: This is probably the most important thing when managing risks. The assessment can help you to identify emerging risks and update them in the management and mitigation strategy you have installed. Consider setting a schedule for risk assessment.
● Segment your supply base: Your business needs to understand the suppliers that are critical and separate them from those that are vulnerable. This can help to ensure that your business does not entirely rely on a single supplier. If one supplier has issues that make deliveries impossible, you can rely on others.
● Track supplier operations: When challenges with suppliers happen, it is your enterprise that is likely to incur huge losses. Therefore, you need to look ahead by following the actions of suppliers and identify early signs of trouble. Things to track about your suppliers include:
(a) Requests for early payments
(b) Strictly following payments that are due
(c) Credit ratings
(d) The supplier’s financial choices
(e) Sentiments about the supplier from other business partners
● Do regular market assessment: This is another important item for your supply chain risk assessment because it helps you to understand concerns about demand to avoid oversupply. If the demand is likely to surge, such as during the festive season, consider looking for more suppliers.
● Improve cybersecurity of your supply chain: As more operators shift to digital operations, you must have a strong data protection system. The goal is to ensure that your data and communication do not fall into the hands of cybercriminals.
Consider working with top security experts, using blockchain technology, and advanced encryption for your data. In addition, you must have a robust system of data backup to ensure that in the event of inevitable attacks, data can be recovered to reduce interruptions.
These are some of the most important items to include in your supply chain risk assessment checklist. Make sure to also focus on improving your supply chain visibility and always have a contingency plan.
Remember that if the supply chain risk assessment and management process appears too challenging, it will be a good idea to work with professionals.