An effective supply chain is the ironic link that every business requires to join together a well-developed product and the market. Everyone knows that, though not everyone takes the time to properly assess the difficulties of their respective markets.
When examining the risks of entering a new market, there are things to look out for that hint towards difficulty. It’s therefore imperative for businesses to ensure they have properly planned how to get into a new market successfully.
Only after that can a good plan be put into action.
These are a few examples of risks that you may come across.
- Companies similar to yours not achieving profitable success
- Strict government regulations regarding your local footprint
- An oscillating demand in your target audience
- An unreliable supply chain partner
Keeping risks in mind, if you still feel that your business has enough girth to pull through to profit, then consider other things. Why are you confident that your supply chain management is good enough?
The intention here is not to patronise you; it’s to expand your awareness of your own work. There are a significant amount of businesses (around 1 in 10) that are rated as less than significantly above average according to their specific industry. 1 in 10 is a large enough probability that your business could have the same limited success.
Around a decade ago, the main risks were component shortages, supplier failures and commodity price volatility, though by 2017, these had evolved into three distinct groups including:
- IT security incidents
- Supplier facility destruction due to natural disaster
- Geopolitical concerns such as war and terrorism
The degree to which these are perceived as a threat varies, and likely reflects the varying ability of companies to conduct supply chain risk management. Up to 50% of supply chain management professionals perceived IT security incidents as a threat, which is very different to the 20% that view geopolitical issues as a threat (which may also vary with global location, material and supply location).
The seemingly over-representative figure of the concern towards IT security incidents is appropriate. Each year sees an increase in the amount of cyber security attacks, and it only takes one well-done attach to break apart a well-developed supply chain. Additionally, in 2016 there was an economic loss of $211 billion due to natural disasters; in the same year 85% of global supply chains faced disruption due to abuse and fraud.
“Hopefully, you realise that effective supply chain risk management is highly important for successful business. There are multiple factors to consider!” Says Mary G. Kershner, financial expert at Draft Beyond and Research Papers UK.
Properly examine the limitations of your supplier insurance
When having a high (or any) reliance on external suppliers for continuous production of your product(s), it is important to consider the vulnerability imposed on your business and business image. Ensure strategic requirements for the limitations of liability, indemnification and supplier insurance in the contracts you have with external suppliers.
Always pay attention to unknown risks
By reading this article and from your own knowledge and experience, there are many common risks to effective supply chain management. However, it is beneficial to your business to also hold a mirror up to unknown risks that you cannot foresee.
With this additional consideration, the resilience of your supply chain naturally increases. A good place to start for this tip is to perform regular inspections. Respond to any risks you pick up immediately, as well as factoring them into your supply chain risk management.
Assess suppliers prior to contractual interaction
There is a very high likelihood of there existing multiple suppliers who will all produce what you want. The performance and quality of different suppliers, however. Conduct a thorough analysis of your various options of suppliers by checking different factors: pending legal action, financial irregularity and scandals are all buzzwords or phrases that should impact your decision to make contact.
Organisation of the supply chain
The full pathway from production to consumer involves warehouses and transport. Various factors may affect the efficiency of every step in the chain, which naturally warrants continual redesigning before opening up the supply chain, to ensure performance and cost are appropriate to the business and its target audience.
Issues arise when businesses consistently go for cheaper options when piecing together the organisation of their supply chains. Cheaper options can lead to countless additional risks to supply chains, such as low production speeds, undermined public image and a flow of funds that is less than most its most efficient rate. Avoid prioritising cost savings for a lower quality supply chain.
Properly consider data and analytics
Facts and figures can very well provide firm ground for good decision making about your organization. Through predictive analytics, you can accurately identify the places within the supply chain that are vulnerable. To do this, you need to broaden your informative links.
An example of this would be to link your data analytics team to weather intelligence information in the relevant area. By doing this, you create the opportunity to strategically choose back-up suppliers that will reduce the risk of a halted or delayed supply (due to weather alterations).
“Other areas to examine thoroughly with analytics are health and safety, sustainability and insurance verification. All three of these areas have the potential to have a very significant impact on your supply chain.” Says Emma L. Jones, business journalist at Writinity and Last Minute Writing.
Case Building for Risk Management
The bottom line is that effective supply chain risk management is crucial. There are many risks to consider and the implication of not properly investigating them is losing money, reputation and footing in your market.
There are many extended benefits to having a successful supply chain risk management:
- A safer workplace
- Better contractor management
- Improved ability to meet sustainability goals
- Reduced delays within supply chains
- Focused contractor management
Make sure your business stays afloat and successful within its market with a proper supply chain risk management. Translate all of this into a written document that is available for anyone to read, understand, and implement. Use a professional writing service, like academized reviews, if necessary.
Reduce vulnerability; stay smart.
Ashley Halsey is a professional writer at Luckyassignments.com and Gumessays.com who has been involved in many projects throughout the country. Mother of two children, she enjoys traveling, reading and attending business training courses.