A practical approach to supply chain risk management

Supply Chain Risk And Risk Management Strategies Powerpoint

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Abstract

The paper evaluates the supply chain risks and risk management strategies that an organization can use to identify, assess, and mitigate prospective occurrence. Risk is a significant component of various operations in an organization, which requires assessment, identification, and mitigation to prevent future occurrence. Many organizations lack an essential process, which would help them to detect and manage risks that may occur at different processes and period. A firm faces both known and unknown risks, where unknown threats are difficult to mitigate due to their nature of the occurrence. The provision of the customized monitoring systems, depending on the organization’s operations and needs shows the preparation of a firm to face the future challenges and mitigate some possible occurrences. A persistent risk monitoring is another strategy, which an enterprise can use to identify risks that may have severe implications if they would occur. Strengthening the supply chain is a significant aspect that helps an organization to respond to the disruptions effectively and avoid severe impacts in various processes.

Keywords: supply chain, risk management strategies, processes, risk monitoring, risk mitigation, defensive mechanisms

Supply Chain Risk and Risk Management Strategies

Supply chain risk management involves undertaking different strategic steps to detect, evaluate, and minimize chances of risks’ occurrence. Thus, it requires a comprehensive method of identifying various risks that may exist in an organization’s supply chain, leading to the integration of the major processes in a firm. Risk management starts with the establishment of a risk profile and after that, address it to ensure an active monitoring. As a result, an enterprise can assess the value of the risk for various aspects of the business and mitigate it to avoid failure in the supplier ecosystem. However, many organizations lack an essential process that would help them to detect and manage risks such as bankruptcy and cyber-attack. The issues, such as globalization, have increased the diversity of risks that an organization faces, where the products from different regions may pose significant risks to a firm’s supply chain process. Globalization has led to the increased complexity, which may pose higher levels of risks, and therefore, requires an organization to address them. Consequently, it is essential to be proactive and institute various risk management strategies, depending on the organization’s supply chain type. The supply chain risk management is a significant aspect that helps an organization to detect, assess, and mitigate the usage of various strategies in order to protect a business’ critical infrastructure and prevent a disruption of the supply chain.

Many organizations experience various challenges, while trying to achieve supply chain transparency, due to the scope and scale of risks, which has become unmanageable. Thus, it is essential for firms to start addressing the challenges in a structured way, which will help them to identify the risks and mitigate them to avoid the future occurrence. Therefore, it is essential to begin by assessing both known and unknown risks. The known risks, according to Kilubi (2016), are risks, which are possible to measure and manage that can affect the business operations. The example of a known risk is bankruptcy, which an organization can evaluate based on the business financial history, while other risks such as cybersecurity are quantifiable through a system that can detect the cybersecurity threats. It is essential for an organization to invest in metrics that will help them to identify risks on order to help to track the possible occurrence of issues that may affect business operations. An organization also face the unknown risks, which are hard to anticipate due to their nature of occurrence. Such risks include the natural calamities, which organizations should establish the defensive mechanisms and create a culture of awareness to give them an added advantage. It is easier to manage the known risks through various methods, such as identifying and documenting them, to assess the value chains of all major products. An enterprise can provide a risk register for tracking of the possible risks throughout the supply chain process, using the existing data.

A supply chain risk management framework is also a significant strategy that an organization can adopt to assist people in assessing the possibility of the risk and measures’ incident taken to combat. According to Kilubi (2016), an enterprise should provide a consistent scoring methodology, which will help them to evaluate the existence of the specific risks and the impact they will cause to the operations. As a result, the supply chain department can prioritize the risks and seal the loopholes that pose the major threats. Moreoevr, a firm should use the appropriate measures, which will help them to protect the supply chain to avoid the business disruptions that will lead to a loss of revenue. The persistent risk monitoring is another strategy that an enterprise can use to identify risks, which may have severe implications if they will occur. Bailey, Barriball, Dey, and Sankur (2019) argue that the use of the digital tools has enabled the identification of possible risks, even in the situations that may appear complicated and impossible to track. The provision of the customized monitoring systems, depending on the organization’s operations and needs, shows the preparation of a firm to face the next challenges and mitigate some possible occurrences.

Risk is a significant component of various operations in an organization, which requires assessment, identification, and mitigation in order to prevent the future occurrence. The supply risk management systems have helped to address the issues such as the unanticipated occurrence of risks, by appealing the issues such as a data coverage. According to Trowbridge (2017), an effective assessment of risks helps an organization to manage it and avoid its severe impact in various operations. Innovation and efficiency is a significant aspect that allows the supply chain department to optimize the processes through an incorporation of technology in order to establish the gaps in issues, which have occurred within a specific period. According to Trobridge (2017), the proactive risk management strategies are cost-efficient and lead to the effective customer service and processes as opposed to the reactive measures aimed at preventing further impacts. Currently, organizations incorporates the aspects, such as lean manufacturing, to ensure the adequate supply chain management systems, which address the broader issues that may affect their operations. The proper analysis assissts the supply chain managers to evaluate various links in the organization's processes that may cause uncertainty in the business. Globalization, for instance, has increased the scope of risks that an organization may encounter. Various regions experience different issues, such as natural disasters and political instability, which if they may occur, they will inhibit operations, and hence, create more problems. Kalawsky, Dani and Ghadge (2012) argue that a prioritization is a significant aspect in the risk management, which helps an organization to determine the suppliers and regions that are susceptible to risks, and hence, seek some alternatives in a case of disruption that may inhibit the occurred operations. Analysis provides an organization with the assessment of the frequency that risk can occur, thus, ensure some measures to manage it.

Planning is another aspect, which helps an organization to analyze scenarios that might severely affect the supply chain’s ability to deliver the efficient services to its customers. For instance, the issues such as material shortage, are the potential issues that may cause major disruptions in the organization operations. In many situations, however, it is challenging to predict the certain scenarios, but the existence of the specific plans in place makes it easy to put the measures that would fit the current situation. Therefore, it is essential to enquire from different parties to seek their views and assess the aspects that require attention. The employees such as warehouse workers, have the first experience in the area, and therefore, they can assisst in the highlight areas that were not addressed. Furthermore, it is essential to train workers on how to attend the specific issues, if they occur at different levels in the supply chain. Such measures will help employees to improvise if such scenarios occurred. Testing and practicing, on the other hand, helps to estimate how workers may respond to the certain risks as well as to determine the aspects that require improvement and provide an action plan. The supply chain managers, for instance, should ensure that there are spare parts for different equipment, which will help them to replace the faulty ones.

Strengthening the supply chain is a significant aspect, which helps an organization to respond for the disruptions effectively and avoid severe impacts in various processes. Thus, it is important to diversify the suppliers, who provide different inputs to the organization. Moreover, a waitlist assissts an organization to avoid the increasing shipping expenses when a customer fails to take a product. According to Oliveira, Espindola, and Marins (2018), an enterprise, which experiences the limited suppliers, who pose the major diversification challenges, may have the alternative routes, methods of transport and different timeframes to deliver their products. Such aspects may mitigate risks that occur in the delivery process, which may halt operations. Furthermore, the frequent communication ensure that the concerned parties keep in touch, and therefore, identify and address effectively the concerns, which occur immediately. The addressing supply chain risks from a broader perspective and involving every concerned stakeholder will help to provide solutions whenever there are hitches in the supply chain process.

The supply chain risk management is a significant aspect that helps an organization to detect, assess, and mitigate, using various strategies to protect a business’ critical infrastructure and prevent the disruption of the supply chain. It is essential for an organization to invest in metrics that will help them to identify risks in order to track the possible occurrence of issues that may affect the business operations.

References Bailey, K., Barriball, E., Dey, A., & Sankur, A. (2019). A practical approach to supply-chain risk management. McKinsey&Company. Retrieved from https://www.mckinsey.com/business-functions/operations/our-insights/a-practical-approach-to-supply-chain-risk-management Kalawsky, R. S., Dani, S., & Ghadge A. (2012). Supply Chain Risk Management: Present and Future Scope. The International Journal of Logistics Management, 23(3), 313-339. doi: 10.1108/09574091211289200 Kilubi, I. (2016). The strategies of supply chain risk management – A synthesis and classification. International Journal of Logistics Research and Applications, 19(6), 604-629. Retrieved from https://doi.org/10.1080/13675567.2016.1150440 Oliveira, R. U., Espindola, L. S., & Marins, A. S. (2018). Analysis of supply chain risk management researches. The International Journal of Logistics Management, 25(4), 671-695. Retrieved from https://pdfs.semanticscholar.org/cd8e/ab87dc7661c90daee7454226c395fa1464f4.pdf Trowbridge, M. (2017). Five Techniques to Manage Supply Chain Risk. Supply Chain Management Review. Retrieved from https://www.scmr.com/article/five_techniques_to_manage_supply_chain_risk