Place SCRM at the heart of your procurement, sourcing, and supply chain programs
Build a level of redundancy and resilience into supply chains. Centralize risk management within your sourcing, procurement, and supply chain operations. This strategy will better enable you to plan for and mitigate risks. Inspect your category/commodity level, supplier levels, and the logistical sphere. Integrate risk management into the source-to-pay process. Extend SCRM processes and systems into the digital supply chain. Make SCRM a must have, not a nice-to-have. Those days are gone.
Capitalize on your risk intelligence capabilities
Digital SCRM enables you to do all sorts of cool things. You can use it to automate data collection to reduce end-user touch points. Leverage artificial intelligence (AI), big data analytics, and risk mapping to analyze and visualize risk intelligence. Digitized SCRM drives a single source of truth across business units, which is crucial for aligning on risk exposure from multiple vantage points.
Gain a holistic, end-to-end view of your supply chain risk
In the COVID-19 era, your supply chain risk exposure doesn't end with your suppliers or vendors. It extends into sub-tiers, where most risk events occur, into your service providers. It includes logistics hubs, such as airports, seaports, and strategic maritime passageways. Risk also seeps into your customer base in the form of reputational risk. If left undiscovered and unaddressed, this can harm your brand. Gain visibility into your entire value chain – suppliers, vendors, logistics, ports, and third parties. Then you can assess the risks and prioritize those you cannot afford to absorb above those you can.
Transition to real-time monitoring and continuous assessment
A big part of being resilient means having fair warning of impending risk events. Whereas current information is power, risk intelligence is strategic advantage. Accordingly, we advise you to stop relying only on initial, bi-annual, or annual supplier risk assessments. They’re highly tactical and quickly out-of-date. Instead, leverage real-time and continuous monitoring of suppliers, supply chains, and third parties and strive to become a forewarned, agile, and resilient enterprise.
Assess your supplier criticality to the business and prioritize on them
Many OEMs have thousands of suppliers, with varying degrees of criticality. Prioritize vendors and suppliers that are strategic or most critical for business continuity. Build supplier and part redundancy for the most critical suppliers and parts. Understand what parts or services are sole-sourced and line up alternative sources – preferably in different markets. Build or expand your inventories for safety stock. And know whether those parts or commodities are interchangeable.
Move beyond reflective and reactive to predictive and proactive
We can (and do!) learn a lot from historical risk data and intelligence, including seasonal patterns, supplier behaviors, and probabilities of impact. Assemble that data to model risk events and outcomes to help your team move from reflective to predictive, and from reactive to proactive. Use real-time data to derive early-warning indicators that may signal an impending risk event. Act before the risk gets ahead of your team.
Combine digital solutions and collaborative relationships to gain a total view of risk
Supply chain risk management is a team sport: fill your bench with lots of talent and modern gear to compete and win. Take a page from the U.S. government’s post-9/11 playbook and transition from a “need to know” to a “need to share” posture. Build relationships with internal stakeholders, as well as your suppliers, vendors, regulators, and other third parties. Enable them with a digital, automated SCRM solution (hint: we think ours are pretty neat). Consider establishing a cross-functional, inter-disciplinary risk management team. Then leverage your supplier relationships and digital tools to dive into the n-tier, gain a total view of risk, and drive compliance.
Hope for the best, but plan for the worst
Bad things will inevitably occur. It’s whether you can see it coming and whether and how you prepare for it that matters the most. To these ends, we recommend that you build supplier-risk profiles and model risk-event scenarios now to understand vulnerabilities. Conduct table-top exercises of various probability/impact scenarios (e.g., low probability/high impact – a pandemic, a canal blockage). And develop off-the-shelf business continuity plans for when the improbable becomes the inevitable.