How do you Mitigate Supply Chain Management Risks?
As we continue to move through 2021, it seems we have adjusted greatly to the impacts of the previous year in many ways and its unprecedented challenges. There is no better time than right now to take a few moments to consider how facing down extreme circumstances has better prepared us to mitigate supply chain management risks in the future.
While 2020 forced many to rapidly respond to massive uncertainty, supply chain configurations, and what amounted to impacts similar to having faced several natural disasters simultaneously, the lessons we take from this unusual time will greatly benefit savvy supply chain managers going forward.
Here, we’ll address some of the greatest supply chain management challenges, and show you how to mitigate the risks that come along with them.
Business continuity issues due to continued COVID-19 impacts
Proactively addressing the continued impacts of COVID-19, especially as these challenges continue to evolve thanks to changing infection levels, effective or less-than-effective vaccine roll-outs, new strains of the virus, and varying regulations from country to country will work toward improving supply chain resiliency and help to counter potential disruptions.
As long as COVID-19 continues to be a factor, businesses are likely to experience at least a few new supply chain challenges. While initial impacts were greatest for companies that relied on suppliers and sources in China, now that impacts are greater in places like Europe and the US, operations and consumer demand issues are likely to be greater sources of risk and functionality issues than ever before.
To mitigate these risks, companies need to evaluate and monitor not only their company vulnerabilities but take stock of the challenges and impacts on their suppliers, contractors, and target consumers as well. Avoid looking only at impacts in-house so as not to be caught flat-footed when other links in the chain falter.
It’s also wise to consider alternative supply chain solutions and partners. Diversifying sources and suppliers will allow for alternate routes to be taken should a particular region be impacted, and allow for flexible solutions that keep interruptions to a minimum or at least counter some of the effects of interruptions.
Similar to the needed solutions for responding to continued COVID-19 impacts, the simplest way to mitigate the risks of doing business with countries and regions that may experience geopolitical issues, such as massive protests, unrest, tax or government regulation challenges, and so on, is to have a diverse range of suppliers, shippers, and sources for materials on hand.
It’s also vital to have contingency plans in place, assuring that all relevant parties are aware of which alternate sources or suppliers to move to first and that communication of these plans is made efficient and effective for rapid response and results.
Data breaches and cyber attacks
Supply chains are not immune to the rising risks of data breaches and cyber attacks that face nearly all businesses in an increasingly online and globally connected business landscape. Data breaches and cyber attacks can cause significant damage, but mitigating these risks is relatively simple and effective if done correctly.
Internet security is, unfortunately, not a “set it and forget it” type of system. It’s vital to have experts on hand that can regularly assess the data and cybersecurity of all systems within your supply chain, and that security patches are made routinely and kept up-to-date.
It’s also vital that all employees of a company are made aware of various cybersecurity risks and are educated on routine and developing methods used by hackers to gain access to systems. Communicate these concerns to other partners in your supply chain as well, and make certain all links in the chain are on the same page when it comes to protecting secure systems.
Major weather events and other environmental impacts
As previously mentioned in regards to both COVID-19 impacts and geopolitical concerns, environmental risks associated with major weather events (a steadily increasing concern thanks to global warming and the resulting increased risks of hurricanes and other superstorms) can cause major disruptions to supply chains unless there is a sustainable and flexible network of alternate suppliers available to be tapped in the event of devastation in a particular source region.
Well-prepared supply chains can expect to experience significantly fewer losses and disruptions, particularly if they have taken the additional step of increasing their suppliers’ resilience through collaboration on things like asset hardening. Insurance, well-planned emergency response procedures, and substitute shippers or products also prove valuable in these kinds of scenarios.
While these particular risks don’t run the full gamut of concerns facing supply chain management, they essentially encompass the majority of the major risks one can expect to be forced to deal with. By crafting contingency plans, having alternate suppliers, emergency response procedures, routinely updated and evaluated cyber-security plans, and so on, most major risks to the supply chain and its management can be mitigated.