Why Do I Need SCRM?

In a world of increasing pressures and threats, there are all kinds of reasons why supply chain risk management is becoming more and more important.

However, it's critical to realize that SCRM is about more than just avoiding a problem—it’s about driving direct and measurable value for procurement and supply chain organizations. Business continuity, supply chain visibility, CSR and compliance, supplier relationship management: These are all ways in which SCRM is a game-changer.

Risk can be like a circle of dominoes falling

SCRM Enhances Business Continuity

  • SCRM is a crucial and often overlooked element of maintaining business continuity.
  • 22% of companies lost $1.2 million or more in the last 12 months due to supply chain disruptions (source: BCI, Supply Chain Resilience Report 2017).
  • Adopting an SCRM solution can help you address business continuity concerns throughout your entire supply chain.
riskmethods helps you watch over your worldwide supply chains

SCRM Enhances Supply Chain Visibility

  • Having an SCRM program in place will help you to complete your 360-degree view of your suppliers’ risk exposure.
  • In 2017, a reported 69% of companies did not have full visibility into their supply chains (source: BCI, Supply Chain Resilience Report 2017).
  • Adopting an SCRM solution gives you the lead time to react to external disruptive forces faster than ever before.
man waiting for hearing

SCRM Enhances CSR and Compliance

  • For brand reputation, it’s vital to make sure everyone associated with your brand—including your suppliers—adheres to standards and regulations.
  • Companies that release a statement related to CSR violations suffer an average of a 2.8% reduction in company goodwill (source: CIRANO, 2012).
  • Adopting an SCRM solution can help alert you to compliance issues for all suppliers, including the long tail.
Supplier Relationship Management is as fragile as a rope threatening to break

SCRM Enhances Supplier Relationship Management

  • By incorporating supply chain risk management into SRM, you’re able to make better, risk-aware decisions.
  • Although financial health is often the main focus when it comes to managing supplier risk, according to Gartner, out of 180 respondents, within the past five years only 36% of supplier risk events were related to supplier financial risk.
  • If you think you can do it all with Google and Excel, you’re wrong. An SCRM solution can help you fully address supplier relationship management.

Build your SCRM Business Case

Supply chain risk management should be at the forefront of everyone’s mind—not just those in procurement or supply chain roles. Need help showing key stakeholders exactly how much SCRM is going to help everyone? Here are the five key steps to building your SCRM business case.

1. Explain the supply chain risk facing your organization.

The goal of this step is to make sure that stakeholders understand exactly what supply chain risk is. This involves asking some key questions to highlight where risk lies, and can also involve bringing in past examples of risk incidents.

2. Explain the implications and the cost of the supply chain risk facing your organization.

The goal of this step is to make sure that stakeholders understand the need for supply chain risk management. This is when you create the burning platform that justifies the investment.

3. Explain what supply chain risk management should look like.

The goal of this step is to describe the promised land of supply chain risk understanding: up-to-date market knowledge, rapid information and alerts and planned mitigation/preventive actions—all of which will be in place after the investment.

4. Explain the plan: how to achieve the supply chain risk management vision.

The goal of this step is to describe the proposed solution (presumably a technology solution) and what is required to establish it (in other words, a high-level adoption plan).

5. Explain the costs and benefits.

The goal of this step is to explain the investment and the return on investment, with financial and non-financial costs and benefits explained, including the plan for tracking those benefits. Want to know more about building the business case for supply chain risk management?

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