The Importance of Supply Chain Risk Management

Supply Chain Risk Management

There are many situations that can cause disruptions within the supply chain. Serious weather, natural disasters, labor disputes, even financial struggles can cause shipping delays. These are a few of the risks that supply chain leaders must deal with every year.

Furthermore, they are tasked with finding creative ways of resolving these disruptions when they arise.

To stay ahead of these potential service disruptions, many professionals utilize a supply chain risk management system. This effective tool permits stakeholders and supply chain managers to recognize threats, determine a corrective or protective course of action, and outline steps needed to reduce supply chain delays. 

The modern supply chain risk management system goes much further than just a simple plug-and-play software. It’s filled with custom solutions offered by professional 3PLs such as Redwood Logistics, which analyzes all potential threats and creates solutions to meet them all head-on. 

Let’s explore the importance of a supply chain risk management system, and why it's crucial to partner with the right 3PL to help you through this process. 


What Is Supply Chain Risk Management?

The expansion of outsourcing or expanding supply chain solutions comes with several risks... some predictable and others not so much.

If a company is looking to stay ahead of potential threats to its normal mode of operation, integrating a risk management solution is a crucial first step. 

Risk management is a process that is completed by third-party logistics companies. Ideally, your 3PL will help you discover areas of weakness, strengths and create risk assessments of each phase of your supply chain operation. From there, the program is further tweaked to operate in the most efficient manner.

Having a professional 3PL oversee the risk management process can greatly benefit a company in multiple ways including:

  • Verifying that product development, production, fulfillment, and final delivery is functioning at peak efficiency.
  • Reducing the potential of profit loss by discovering risks early.
  • Responding quickly to unexpected situations or events based on planning and execution. 
  • Providing safeguards to protect your brand's reputation. 
  • Improving customer support and satisfaction. 
  • Staying ahead of regulatory issues.
  • Ensuring your supply chain company is investing in technology solutions that make sense. 
  • Creating a blueprint for dealing with unexpected challenges with reduced delays or expenses.


Supply Chain Risk Management Benefits

Any supply chain that invests in a risk management system stands to benefit in a multitude of ways. Beyond the ability to recognize threats, create plans to deal with them, and establish steps to resolve conflict, a supply chain risk management system offers the company multiple ancillary benefits...


Creates a System of Best Practices

Best practices in any industry are created to establish a series of controls or procedures for ensuring quality, reducing errors, or maintaining compliance with regulations. At its core, this is the primary objective of a good risk management system. 

When a professional 3PL begins the risk management audit, they discover areas of strength, weakness, waste, and organizational structure. Once the risks are discovered, they’re able to create best practices for supply chain management to mitigate these hurdles. 


Improves Communication

Multiple risks can be resolved through improvements in communication. Supply chain management depends on seamless communication, to ensure all parties are aware of changes, delays, or unforeseen service disruptions. 

The supply chain risk management system gives stakeholders the right communication tools – whether it’s cloud-based, SMS text, email, or desktop alerts – or updated tracking solutions for improved visibility, transparency and supply chain management. 


Respond Quicker & Maintain Operations

When a natural disaster strikes, those with a plan in place to deal with the unexpected are those who respond quickly and maintain business operation. Your customers, vendors, distributors, and retailers depend on your commodities delivered quickly and without delay. While most people understand that accidents or natural disasters can happen, those who are ahead of the game are those likely to succeed when others fail. 

A company that understands their threats and has a plan to eclipse those risks are the ones who succeed in business. The supply chain is filled with hurdles, from weather to self-inflicted problems. Investing in a supply chain risk management system completed by an expert 3PL simply makes business sense. 

If you’re looking to stay ahead of supply chain or logistics related risks, contact the team at Redwood Logistics.