How to Minimise Supply Chain Risks
As procurement and supply professionals are aware, supply chain risk management is an inevitable part of running a business. Supply chain management can be a daunting task, with proactive supplier relationships being crucial and the uncertainty of Brexit ever looming closer. So, what are the risks that exist in supply chain management and how can these risks be minimised?
What risks exist in supply chain management?
Risk is always a key concern for supply chain management professionals. Procurement teams are constantly facing an increasing number of challenges due to supply chain disruption and risks occurring in a number of ways, both internally and externally. Below are some potential risks that would need to be mitigated:
- Unpredictable customer demand or a customer / supplier demand that is not fully understood.
- A disruption to the sourcing or flow of raw materials.
- Economic factors can prove to be a huge risk, particularly with the uncertainty of Brexit, as mentioned above.
- The facility conditions of external suppliers.
- A lack of contingency planning internally, should external risks occur.
- Internal changes in structures and processes / communication channels.
Ways to minimise supply chain risks
With risk always being part of the supply chain, it is important to address anticipated and unanticipated events. The below highlight some of the ways in which risks to the supply chain can be minimised.
It is important to determine an action plan for each situation that may occur. After deciding which areas will need particular attention, you will need to outline your step-by-step plan should a situation arise. Some examples of this could be economic / political factors or an unexpected customer demand. It may also be useful to consider unlikely scenarios that could have the potential to cause impact, which could be as simple as members of the business asking “what if?” at each stage of the supply chain.
2. Monitor and analyse risk scenarios
As part of analysing risk scenarios, you will also need to prepare for “unplanned” complications. This can include problems with a supplier, such as process quality issues or difficulties with raw materials or couriers.
3. Fully Engage in Supplier relationships
As you will rely on your suppliers for further help should any disruptions arise, it is important to engage in building strong supplier relationships. This means that you can work together to solve any problems that occur and build trust between parties. It may also be useful to build these relationships so you can understand your suppliers’ limitations and risk factors allowing for you to plan and mitigate against these.
4. Build Flexibility
This is important as it will help should you need to adapt to change with minimum impact. This could be at a company culture level, such as adopting a culture of agility, as well as sharing forecast and demand information with trading partners, should a change in demand occur.
5. Be Proactive
The above points help you to be proactive as opposed to reactive in the mitigation of supply chain risks, ensuring that rather than suddenly trying to solve a problem once in has occurred, you are prepared should any issues arise.
How can you improve your skills in minimising supply chain risks with CIPS?
As the professional body for procurement and supply personnel, the Chartered Institute of Procurement and Supply (CIPS) is a key resource for anyone looking to improve their knowledge and understanding of the profession.
CIPS offers a number of procurement and supply qualifications that can get you on the right path to excel in your career and develop your skills in minimising risks. These include:
- CIPS Level 3 Advanced Certificate in Procurement and Supply Operations
- CIPS Level 4 Diploma in Procurement and Supply
- CIPS Level 5 Advanced Diploma in Procurement and Supply
- CIPS Level 6 Professional Diploma in Procurement and Supply
If a professional qualification or training is not for you, you can learn about procurement and supply through the CIPS Knowledge hub which provides best practice insights, guidance and tools, or Supply Management magazine for insights delivered to your mailbox.
If you would like to start or progress your career in procurement and supply, search for your next job with Supply Management Jobs now.