Resilient Supply Chains: Become a Disruption Shaper

THE RESILIENT ENTERPRISE | THE RISKMETHODS BLOG

During the pandemic, businesses have had to improve their ability to navigate risks. At the same time, enterprises continue to face risks emerging from natural disasters, geopolitical instability, or company risks driven by financial or reputational impacts. With uncertainty in the business environment, risk remains top of mind. Yet some companies are more prepared than others. 

1. Why enterprises need to be risk aware

Of course, no two organizations are alike. Yet our experiences here at riskmethods show that enterprises willing to take on a commitment of becoming risk aware are rewarded many times over. They are able to demonstrate a combination of productivity, agility, and resilience.  

As with all disciplines, how organizations choose to increase supply chain resilience varies widely. Factors include the company’s size, industry, and the supply chains they need to manage. But evidence of how organizations are differentiating themselves based on their resilience is demonstrated in recent Gartner research.  

2. How do disruption shapers reduce risk exposure?

In the Gartner survey, the authors focus on advantages of what they call “disruption shapers” versus “disruption responders.” The research suggests that disruption shapers better manage global supply chain complexities, such as: 

  • the number of different supply chain processes
  • distances between suppliers
  • number of n-tier suppliers and manufacturing sites (both internal and external

Disruption shapers reduce their exposure to risk by being more likely to experience fewer unfamiliar high impact supply chain disruptions per year than disruption responders.

3. What innovation leads to resilience?

One key activity demonstrates the difference. Disruption shapers can embed awareness into their overall supply chain strategy through their pursuit of risk-aware innovation. Yet innovation comes in many forms. And enterprises looking to invest in supply chain technology to improve their risk awareness have several options. So, the question comes down to: What innovation do you need to become resilient? 

Numerous solutions are available. And a lack of maturity exists in supply risk management as a discipline overall. So, organizations take various approaches to coordinate people, processes, and technology. One successful approach to innovation starts with a customer-centric view.  

4. How innovative companies build resilience

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Global enterprises may work across more than a hundred manufacturing and distribution sites. Typically, the focus has been on productivity and cost savings within the procurement arena to stay competitive.  

However, in recent years, enterprises have faced increased exposure to risk across the strategic business lines. In response, the most innovative companies have begun investigating ways to build resilience into their operating model. To do this, the risk management teams develop programs around managing five key risk areas, in particular:

  • Financial
  • Operational
  • Regulatory
  • Cyber
  • Reputational

By leveraging the AI-powered technology of The riskmethods Solution™, innovative companies are able to tie risk information into a balanced scorecard. This is then applied both internally and to their suppliers. With the scorecard, you can measure areas including productivity, quality, service, and innovation. Furthermore, your supply chain leaders can now focus on managing productivity in concert with operational risk. Then your enterprise is better able to respond quickly to changes in supply and demand in today’s volatile supply markets.  

5. How The riskmethods Solution helps minimize disruption

Another way forward-thinking risk management teams meet their strategic initiatives is by collaborating with supplier development. For example, they directly embed preventative risk management approaches throughout the continuous source-to-pay cycle. By embedding supplier risk into strategic sourcing, you can make that shift from reactive to proactive. This enables you to gain competitive advantage. 

By incorporating the automated supply chain risk management of The riskmethods Solution into their supplier lifecycle, disruption shapers are better able to actively monitor their supply base against performance trends. Aided by advanced analytics, you improve your risk awareness and can monitor wider supply events. These include natural hazards such as flooding, or negative news about a particular supplier or supply base, or raw materials provider, among others. 

Automating supply chain risk management strengthens resilience. Whether it’s pandemic, a flood, or a typhoon, proactive enterprises have mitigation, prevention, and preparedness plans in place. This enables you to be able to minimize disruption, no matter what that event may be. It can help establish a new way of working. 

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6. Why collaboration supports preventative and proactive strategies  

Having real-time risk information at your fingertips expands your capabilities to manage risk without straining resource. This allows you to become proactive, rather than reactive, to disruptive events. But further still, monitoring empowers you to: 

  • Leverage positive business outcomes
  • Help shape rewards and incentives for partners
  • Improve collaboration with your supply base
  • Strengthen supplier relationships
  • Gain access to sub-tier suppliers

To deepen these capabilities, numerous riskmethods customers are exploring the use of riskmethods Supply Risk NetworkTM. This is a trusted hub for enterprises and their supply network partners to collaboratively manage supply chain risk. In successful relationships, suppliers and sub-suppliers understand that it is not only about reducing risk for the purchasing enterprise. They want to grow with their customers and maintain their own networks securely. 

The key is to develop a systematic, sustainable approach to building a scalable risk program. Through holistic supply chain risk management, you improve productivity, agility, and resilience.

Why innovation is the key to building resilience in 2022

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