Regardless of the state of your business, though, I can tell you how you shouldn’t define risk management: You shouldn’t define it as “something you do when a disaster has occurred.”
Here’s the thing: The key to managing risk isn’t about waiting for something to happen—it’s about getting ahead of the risk in the first place so that when it happens, you’re prepared. And for a risk management program to be most effective, you should be taking daily steps to make sure any kind of risk event has the smallest possible impact on your organization.
At riskmethods, I work with companies to reduce supply chain risk. Here’s my breakdown of the top 3 daily tasks that you should be doing to keep your supply chain secure:
#1: Scour the news for your supply chain’s major geographical regions.
One of the biggest and most consistent takeaways I’ve gotten from talking to organizations suffering from supply chain disruptions is that even if you have a close and communicative relationship with your supplier, the customer is almost never the first call when something bad happens. Suppliers want to make sure they have a plan in place, or at least a communication strategy, before they start to sound the alarm bells. What this means is that you need to take it into your own hands to make sure things are running smoothly.
If you don’t have an actual supply chain risk management program with tools designed for this purpose, this daily task can’t be comprehensive in scope (or it’s all you’d ever do, and you still wouldn’t be done). But at the very least, you should make a list of the geographic regions key to your supply chain, and then check on them daily to make sure there’s nothing going on that you should know about. Are there wildfires threatening a key warehouse? A hurricane making its way toward a major port? A government action that might result in plant shutdowns? These kinds of events can happen from one day to the next, and staying on top of them is a must if you want to reduce supply chain disruptions.
#2: Check in with some of your key suppliers.
Everybody knows that you should stay away from single-source suppliers—and everybody knows that everybody has single-source suppliers. If you can’t eradicate them completely (and you probably can’t), you should at least know who they are, and make sure you’re checking on them so you’re aware of any potential events that might affect their ability to provide your goods, whether that event be financial, weather-related, compliance-related or something else.
On top of your single-source suppliers, you surely have a few other key suppliers whose demise would hit your business hard. (Nokia, for example, has identified the suppliers of their top revenue-generating products.) You’re not going to be able to call up your key suppliers every day (and I guess they wouldn’t like it anyway), but if you do some work on this one day at a time, you might get at least a little bit of a heads-up that’s something is about to go wrong before it actually does.
#3: Compare high-risk suppliers with key suppliers.
If you’ve completed #1 and #2, you probably have at least a general idea of who some of your riskier suppliers are. Now, compare the risky suppliers with your key suppliers—are there overlaps in this list? If some of your riskiest suppliers are also your key suppliers, you’re going to want to take another look, and make sure that you have a plan in place to address problems that might arise if any of your risky suppliers runs into a problem that disrupts their business (and, therefore, yours).
Frankly, if reducing supply chain risk is really a priority in your company, you’re going to want more of a comprehensive plan than what I’ve laid out here. If you’ve got any questions about how we can do each of these tasks for you (and much more easily, and much faster!), don’t hesitate to reach out to me at email@example.com.
But even if you’re not ready for a risk management solution, I hope these tips will keep you moving in the right direction—that is, the less risky direction. Happy riskbusting!