3 Practices to Ensure Supply Chain Resilience
3 minute read
Supply chain resilience, or the ability to withstand and manage disruptions to your supply chain without a major impact on your operations, has become a core tenet of successful business. If the past few years of unexpected and unpredictable global events have taught us anything, it’s that there’s no room for crossed fingers in supply chain management. The more expansive your supply chain, the more possible vectors for a disruption. The best way to handle this risk is to identify the areas where a potential disruption could impact business continuity, diversify your supplier network and manage your relationships with suppliers to ensure they know your expectations and you are confident in their practices.
1. Planning for a disruption
By achieving visibility into your supply chain, you can build a register of the risks most likely to disrupt your business. It can take time to form relationships with your suppliers, identify metrics for evaluating risk criticality, and build out “what if” scenarios for supply chain events, but by discovering where disruptions could have ripple effects and which risks might affect business continuity, you can better mitigate the impact of a disruption were it to happen. For the suppliers most likely to seriously impact your organization, it’s worth asking: do you have an alternative supplier ready to assist during a disruption? Which services or products would you still be able to provide in the case of a disruption to this supplier? Would other suppliers be affected by this disruption, and do they have continuity plans in place? Once you know which disruptions are most likely and what actions would be necessary to mitigate their impact, you’re in a much better position to weather a supply chain event without impacting your business.
2. Diversify suppliers
Without strategic redundancies in your supply chain, you’re at the mercy of your suppliers: you get their output when they’re functioning, but when a disruption occurs, you have to wait on their remediation efforts. In the case of higher-risk suppliers, or suppliers who could seriously impact business continuity were they to experience a disruption, it’s often smart to build a diverse network of suppliers and stockpiles so you can deliver products and services in the short term while the affected supplier resolves the issue. This could mean having a warehouse full of necessary manufacturing materials or building relationships with secondary suppliers—the important thing is knowing when a disruption would be so costly that it’s more responsible to spend on a redundancy.
3. Manage supplier relationships
To ensure a resilient supply chain, it’s important to ensure that your relationships meet your needs. First, this means evaluating your suppliers and determining which ones are doing a better job providing for your interests, which allows for greater visibility of which are most likely to expose your company to disruption. Next, you may want to bring some of your suppliers to the negotiating table to argue for a higher degree of protection and transparency—sometimes, that will be enough to resolve your issues, and in other cases you may need to choose a new supplier. One way to ensure that negotiations are productive is to listen to your suppliers’ concerns, too: is there anywhere you could be putting in more effort to meet their needs? By building a reciprocal relationship, you gain leverage to advocate for your own needs.
No one wants to be caught out after a supply chain disruption—they can cause serious business continuity issues, loss of revenue and even serious reputational damage. Once you’ve begun to evaluate and manage this risk, though, you can turn a robust global supply chain into an asset instead of a liability. One product that helps companies manage supplier relationships is ProcessUnity for Third-Party Risk Management, which automates the distribution of risk assessments and enables risk tiering by criticality. With the help of the practices listed above, in concert with strong third-party risk management software, you can stay on top of supplier risk.
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ProcessUnity is a leading provider of cloud-based applications for risk and compliance management. The company’s software as a service (SaaS) platform gives organizations the control to assess, measure, and mitigate risk and to ensure the optimal performance of key business processes. ProcessUnity’s flagship solution, ProcessUnity Vendor Risk Management, protects companies and their brands by reducing risks from third-party vendors and suppliers. ProcessUnity helps customers effectively and efficiently assess and monitor both new and existing vendors – from initial due diligence and onboarding through termination. Headquartered outside of Boston, Massachusetts, ProcessUnity is used by the world’s leading financial service firms and commercial enterprises. For more information, visit www.processunity.com.