6 Steps to Understanding Risk Management in Your Supply Chain

6 Steps to Understanding Risk Management in Your Supply Chain

Every business is only as good as the supply chain it’s built on. Understanding issues within the supply chain itself and effective management of the risks are imperative for the survival and prosperity of a company. This will help to maximise customer value and ensure an uninterrupted flow of goods and services.

Leaders need to be able to recognise and understand the risks that are present in their supply chains so they can ensure that products arrive where they are supposed to, when they are supposed to, and in pristine condition.

The problem is, most organizations tend to focus on what happens within their own walls. Few understand and effectively manage the entire chain of events that deliver products to the final destination. The result is a disjointed and often ineffective supply chain.

To help you overcome this issue, here are five steps you can implement to improve the risk management of your supply chain and streamline the entire process.

Know Your Suppliers and Potential Suppliers

There needs to be an effective due-diligence process that can answer any queries you might have about third-party practices. Questions to ask include:

  • Do they have a good track record?
  • Do they fulfil their contractual obligations?
  • Do they have good existing relationships with customers or suppliers?
  • Are there any conflicts of interest?
  • Do they meet the high standards you set within your company?

This list is not exhaustive but if these factors are not considered you run the risk of putting your supply chain, and ultimately your business, at risk. Research each supplier and business you are dealing with so you are more prepared to manage issues when they arise. You may find a certain link in your supply chain is the reason for inefficiencies. In this case, it may be time to find alternatives.  

Get What You’ve Asked For

Monitor the goods and services you receive closely to make sure you are getting exactly what you’ve asked for and, more importantly, paid for. If a supplier starts cutting corners on products or services, it is you and your business who will suffer at the end of it. By working with organised, professional suppliers and couriers you can ensure you are getting quality products and, in turn, your customers are getting a quality service. On average, inventory is accurate just 63% of the time. This shows a drastic need for improved inventory management, which begins by improving your supplier process.

Only Pay for What You’ve Received

You should always ensure that your invoice corresponds precisely with the goods or services you have received. This may seem like an obvious thing to do, but it is imperative that you manage your imports to make sure you are not getting fleeced. This is especially important if you have a complex network of suppliers because it is easier for things to go missing if a blind eye is turned.

A poll of 2660 professionals found that 29% indicated that their own supply chains had experienced waste, fraud or abuse in the past twelve months. This statistic highlights just how common an issue this can be. Approaching the situation with a healthy scepticism rather than an intent to find wrongdoing can help to reduce the risk to your company.

Prevent and Resolve Disputes Effectively

There will inevitably be a time where a dispute is unavoidable on some level of the supply chain. How it is handled can solve or worsen the issue. You want to quickly deal with any dispute so that it promotes smooth running between the links in your supply chain, ensuring that everyone is happy.

By having processes in place that can highlight potential conflict areas you can also avoid disputes happening at all. Effective management of all levels of the supply chain can enable you to do this and the employment of supply chain automation that can spot and reduce human error can also help. This will mitigate risks to your company and enhance the value of it as well for prospective partners and new suppliers.

Avoid Risks in The Sales Process

Management should be aware of the potential risks in the sales process as this can protect the supply chain from a knock-on effect. The sales process is essentially customer demand that ultimately dictates how your company moves forward. As sales channels evolve, they can introduce new risks into your supply chain. For example, opening a new branch to meet new demand can put a strain on the supply chain. To address this, understand the liability that sales interactions expose your company to and how they can affect your sustainability. An expert supply chain manager may be helpful to take on this important role and ensure all sales processes are growing your business, not stalling it.

Use a Quality Courier Service

Your courier team is usually the only face-to-face contact your customers have with your company. Thus, they need to expertly deal with customers and help avoid issues falling back down the chain.

Now is the Time to Focus on Supply Chain Management

With the vast number of challenges faced, it’s no surprise that 85% of global supply chains had experienced at least one form of disruption in the past twelve months. However, proactive risk management in the supply chain is the solution. Many businesses note they spend around 50% less time dealing with supplier disruptions if they have effectively risk managed their supply chain.

79% of companies with high-performing supply chains attain greater revenue growth than the average in their industries. If you needed any more convincing that supply chain risk management needs to be at the forefront of your business plan, let that statistic be it.

Creating value in your supply chain and mitigating the risks it is exposed to will ultimately lead to value in your company and increase the prospects of partnership or investment as well. All of this will help your company grow above and beyond industry norms.

Where to Begin

If you’re interested in finding out how our expert courier team can help you reduce risk in your supply chain, get in touch with Same Day Dispatch Services today. Tel: 0800 999 1010.

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June 2024