Basic step of supply chain risk management

Basic step of supply chain risk management

Written by Deepak Bhagat, In Business, Published On
April 5, 2023

Supply chains are critical to the backbone of economies and are essential to increasing market access and accelerating both rural and urban consumption. A well-structured and efficient supply chain infrastructure can help reduce manufacturing costs, improve the ease of doing business, and enhance customer experience and satisfaction.

The pandemic has caused significant business disruptions worldwide, leading people to reassess their approaches to getting things done. This disruption is due to the expansion of globalization and new technological developments. Additionally, the global supply networks that we are part of are undergoing significant changes.

As a result, there is a high demand for individuals with Supply Chain Management (SCM) skills. Starting or switching to a career in supply chain management is relatively easy, and it can offer growth opportunities, problem-solving challenges, and high pay. SCM plays a crucial role in many companies’ strategies and competitive advantages. As a result, students worldwide are joining Supply Chain Management course to learn about supply chain management.

Supply Chain Risk Management (SCRM): How to start?

This article describes four steps to implement supply chain risk management in your company. Keep reading if you’re considering this job or want to learn more about the Supply Chain Management course.

What is the significance of Supply Chain Management in the present day?

In today’s economy and market, companies rely heavily on Supply Chain Management and innovative business strategies. Managing the entire supply chain effectively requires collecting data at every stage, from acquiring raw materials to delivering final products. Supply Chain Management assists in balancing economic supply and demand.

Career opportunities determine the value of any Supply Chain Management course or degree. Supply Chain Management is a subject that is rapidly expanding. Therefore, most investments in Supply Chain Management courses are expected to yield returns.

How would you explain Supply Chain Risk Management?

Supply Chain Risk Management refers to recognizing, evaluating, and mitigating potential hazards in the supply chain. The supply chain involves all the steps that transform raw materials into finished products or services, including planning, sourcing, procurement, conversion, and logistics. Companies often adopt global supply chain management strategies to gain a competitive advantage, which may also increase the risk of quality, safety, business continuity, and reputational issues. Therefore, addressing these challenges through effective Supply Chain Risk Management practices is essential.

How to reduce Supply Chain Risks?

Supply chains are inherently risky, with various factors that can impact suppliers, such as natural disasters, hostile acts, or organizational failures. With the increased reliance on technology, supply chain risks have expanded to include IT outages, data breaches, and cyberattacks. To manage these risks, it is essential to restructure the supplier list, clearly understand supplier processes, and have robust data on your company’s global supply chains.

  • Restructure your supplier list: Evaluate your suppliers and identify any potential risks they might pose. Consider replacing high-risk suppliers with more reliable ones.
  • Understand supplier processes: Gain a thorough understanding of your suppliers’ processes to ensure they meet your quality and safety standards.
  • Understand your company’s global supply chains with robust data: Collect and analyze data on your company’s global supply chains to identify potential risks and develop contingency plans. This can help you mitigate risks and respond quickly to any disruptions.

To manage supply chain risks, the following steps are typically taken:

First, vulnerability and business continuity considerations lead to supply chain risk management. Then, the process includes identifying, assessing, treating, and monitoring supply chain hazards.

By engaging in risk management, potential risks can be identified and minimized.

Step 1: Evaluate your risks

Various supply chain hazards, such as worldwide economic uncertainty, unreported financial issues with partners/suppliers, and climate change or pandemics, can lead to delays, higher costs, and reduced sales and customer satisfaction. Therefore, it’s crucial to study current trends, analyze past data, and predict future risks. Although predicting future risks is challenging, it requires creativity and attention to detail to anticipate potential risks associated with your company’s location, suppliers, distributors, manufacturers, and retailers.

Step 2: Determine risk scores

Understanding the likelihood of risks and how they can impact the supply chain is critical. Risk scoring provides a great way to identify which risks need immediate attention. Risk scores can be represented in various ways, such as numbers, colors, or other graphical representations to prioritize and address the appropriate risks.

Step 3: Develop response and mitigation plans

Creating contingency plans for each potential risk can be time-consuming. However, analyzing various options beforehand can help businesses quickly pivot if a catastrophe occurs. Having well-developed contingency plans can put a company in a better position to mitigate the impact of the risk if it does happen.

Step 4: Establish your SCRM plan

Incorporating the insights gained from the previous steps, a comprehensive Supply Chain Risk Management (SCRM) plan can be developed. The plan should include the five core techniques, namely finding alternative providers, discussing with key suppliers, increasing vendor eligibility, buying more, and discussing with major suppliers.

By enrolling in a Supply Chain Management course, you can learn basic steps and risk management concepts to stay updated and effectively manage supply chain risks.

Are you considering a course in Supply Chain Management?

The field has a high demand for skilled professionals, and it can lead to excellent job prospects, senior positions, and higher salaries. While some may find the mental stimulation of the field intensity, it’s hard to imagine modern businesses operating without technology. A bachelor’s or master’s degree in SCM is not the only way to enter the field. Non-traditional learning environments, such as online courses, are also viable options. With SCM’s adaptability and popularity, you can succeed by finding a role that suits your interests and abilities and improving your in-demand SCM skills. The Simplilearn platform offers various SCM courses, catering to novices and master’s degree seekers. Ultimately, whether you pursue a Supply Chain Management course or not, remember that a degree is optional for a successful career in the field.

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