Managing Risk - How do I Mitigate Risk and Prioritise My Supply Chain?
22 April 2020
A thorough analysis of your whole supply chain beyond tier 1 is essential to gain an accurate view of its current health and identify areas of concern. CIPS recommends firms map the locations of suppliers to pinpoint those in areas most affected by Covid-19. This can be done using regions or postcode searches but the greater the detail, the easier it is to estimate where problems may be encountered, such as delays or cancellations affecting ports or air freight. This geographical data should be compared against the level of risk for each source so you can prioritise those sources at highest risk to the business. From here, it will be possible to build scenarios to develop rapid demand shock response plans.
Risk profile assessments can help understand which individual suppliers may be more susceptible to disruption. For instance, if you use a warehouse that runs entirely manual operations, you can assume that facility will be seriously impacted and can consider how potentially disruptive that could be to your business. Whereas if a facility is highly automated, it may be more resilient.
Re-assessing your inventory processes is particularly important for firms operating lean inventories. The Hackett Group is among those recommending increasing in-house stock of critical items to protect against delivery delays and monitor flow to ensure cash is allocated to the most urgent inventory.