A comprehensive approach to SCRM involves the management of all types of risk, for all tiers of supply and for all risk objects (suppliers, locations, ports and more). When done well, SCRM is a critical enabler that is embedded and integrated into the core processes of an enterprise.
The Supply Chain Risk Management LifecycleIdentify, Assess, Mitigate
The only way to address risk is to make sure you’re identifying it in the first place. The first phase of the risk management lifecycle is to establish a risk profile and then enact active monitoring to keep it up to date.
Understand what impact a risk event could have on your business. Be aware of those partners who have a significant impact on sales, margins or profit.
Define both preventive action plans and reactive action plans. These are what provide the basis for addressing risk using appropriate measures to secure supply and protect brand.
Types of Supply Chain Risk:RISK YOU NEED TO MANAGE
The possibility that suppliers will encounter a business scenario that threatens their financial health.
One of your suppliers will engage in activity in a way that negatively affects your brand perception.
The possibility that your supply chain is disrupted by events like fires or explosions.
The possibility that your supply chain is disrupted by global political events, like wars or revolutions.
SCRM Is Increasing In Importance
Just in Time / Just in Sequence
Running a lean supply chain means you have less wiggle room when things go wrong.
Outsourcing and supply chain length and complexity are growing. This leaves you open to more risk.
With more regulations and the increasing influence of social media, it’s critical to address issues that could harm your brand image.
More storms. More political strife. More cyber events. Threats are increasing, and so is your risk.