Three ways to improve risk management across the supply chain

26 August 2014 | Mark Woodward

Mark WoodwardWhile effective supply chain risk management programmes recognise things don’t always go according to plan, they also aid businesses build a more resilient operation in response.

The risks of supply chain disruptions aren’t limited to first tier suppliers and customers. The ability to access information from every part of the trading network in real-time can help businesses identify and anticipate risks, as well as inform the range of decisions needed to mitigate them. That visibility fuels the approach behind collaborative planning and execution.

Here are three ways to improve risk management across a company and its trading partner network:

• Visibility. The most successful programmes are designed to function end-to-end, all the way from supplier constraints to customer demands. It’s absolutely critical to have complete visibility across all data at multiple tiers of the supply chain. Enabling real-time transparency across multiple tiers of partners requires the right technologies, expertise, and a commitment from senior management. With these pieces in place, businesses can reap the full benefits of outsourcing and globalisation while seeing the big picture.

• Real-time collaboration. Without collaborative capabilities, companies are forced to depend on contingency plans in isolation from their key suppliers and distributors. In the event of large-scale shutdowns or inventory losses, the ability to know sooner and collaborate in real-time will enable companies to switch among alternate suppliers and match short-term demands with order information.

• Collaborative planning and execution. When one part of the supply chain is disrupted, the negative effects can ripple across an entire trading network. To minimise the impact of such a disruption, it’s critical to identify and resolve exceptions before profitability or service levels are compromised. Collaborative planning and execution allow businesses to resolve supply chain disruptions with the collective intelligence and reach of an entire trading network. This unified view allows them to expedite, transfer, or re-route existing assets to wherever the current demand exists.

While many risks are unavoidable, they can be intelligently managed with the help of the right technologies and information systems. Today’s risk management tools are enabling responses to real problems and providing an information and communication platform to manage situations as they happen. Businesses shouldn’t wait for demand to spike, or for a major disaster to hit, before taking action to reduce their supply chain risk. By being proactive, they’ll be in a prime position to react quickly when something eventually does go wrong.

☛ Mark Woodward is president and CEO at E2open

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