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Supply Chain Shared Risk Management

by Vanguard Software

Risk is an intricate part of supply chains and manufacturing. Larger firms might tap into vertical integration, low-cost outsourcing, or supplier rationalization programs, but this leaves these businesses more vulnerable to risk. Smaller manufacturers may not be able to afford new technologies and automation to ensure safe environments for manufacturing.

With robotics, big data, and the growing demand for cybersecurity and connectivity, supply chains must expand to include customers proactively and invest in the high-tech tools their businesses need despite a lack of finances and skill sets. Customer-supplier relationships are now including customers to carry some of the risk faced by suppliers. This can include capability acquisitions, technical support, and financial resources.

Mitigating and managing risks will require a thorough understanding of supply chain risks to eliminate any threats, which is why it’s best to address potential risks and implement strategies to mitigate them.

Strategy risk

In choosing supply management strategies, businesses all work differently. Small businesses might choose to source locally if finances are limited. Larger businesses may be concerned with cyber risks, shipment delays, counterfeit products, and sabotage. If not addressed early on, risks can lead to losses in revenue, operations breakdowns, and loss of customers.

To address this, outline the best suppliers and up-front strategies, and use market intelligence that’s proven for decision making. Think two-dimensionally: Gauge the chance of risk occurrence and then consider the potential impact to the bottom line.

Market risk

In considering compliance, brand, market, and financial exposure, limiting outsourcing can reduce exposure from suppliers that might deliver incomplete orders or sub-par products. To mitigate this risk, outline the quality standard tolerance on product lines and monitor them closely before any incident affects brand or compliance regulations. With any transportation issues, ensure partners are aware of customer demands and forecasts in the event of any fluctuations.

Performance risk

When selecting suppliers, stay vigilant. Monitoring supplier relationships to minimize disruptions can help maintain quality and avoid financial strains from changes in ownership, geopolitical changes, or labor strikes.

When dealing with salespeople and delivery staff, keep in mind that too often people aren’t vested enough in the supply chain to understand its operations and intricacies. Training all stakeholders ensures they follow the company’s vision.

Finally, develop strong relationships with key partners that can help with everything from cybersecurity and big data to new technologies and cloud computing.

Implementation risk

As more businesses rely on robotics and machine learning, smaller supply chains might start feeling left behind. You need to understand lead-times and performance, and production implementation with suppliers to gauge capacity and lead-time problems.

Ramp up  suppliers right away for accurate assessments with performance, production, and lead-times. Further, good supply planning solutions are able to accurately assess actual lead time (versus supplier-stated lead times).

Demand risk

There will always be challenges and fluctuations in inventory. Monitor supplier relationships and look for areas where they might be overwhelmed. Some suppliers can be too eager to take on new opportunities. Share your demand and supply plans with your suppliers to improve communication and collaboration. Most leading solutions, like Vanguard Software, are able to support these requirements.

Conclusion

Risk is an inherent part of manufacturing and supply chains. With a comprehensive approach, communication with suppliers, and strong relationships with key partners, you can limit risk exposure and passing risks to end users, partners, and customers. The best strategies require time and attention to focus on cost-saving initiatives and risk mitigation concerns but are all worth it in the end.

Not sure how to properly manage and mitigate risks? Vanguard Software offers the sharpest digital transformation technologies that incorporate machine learning, artificial intelligence, and supply chain design and can assist with supply chain shared risk management strategies.

About Vanguard Software
Vanguard Software introduced its first product for decision support analysis in 1995. Today, companies across every major industry and more than 60 countries rely on Vanguard Software’s Integrated Business Planning (IBP), forecasting and advanced analytic cloud platform. Vanguard Software is based in Cary, North Carolina.

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