By: ProcurementIQ Staff Writer, Ashley McKay
From natural disasters to warehouse strikes to shortages in materials and resources, is your organization prepared for the next supply chain disruption? According to Stefan Geib, business development manager at UL EHS Sustainability, "Supply chain risk will only get bigger...While short-term fear and uncertainty brings unexpected costs and potential disruption, the longer-term implications of failing to tackle sustainability could be catastrophic, putting the very existence of many businesses in jeopardy." (To read Stefan Geib’s full article on identifying risk, click here.)
Although the next disruption is inevitable, there are several resources and strategies that supply chain and procurement professionals can implement to mitigate risks:
- Supply Chain Management Software: In his article, Stefan highlights the use of supply chain management software. Organizations that take advantage of this software are able to better manage their transactions, inventory and relationships with their suppliers. " Cutting edge software can even track news sites and government data to deliver minute-by-minute intelligence on earthquakes, social unrest, port strikes and other issues that could potentially disrupt supply chains," states ProcurementIQ Analyst, Sean Windle.
- Supply Chain Insurance: This insurance can reduce or mitigate the financial impact that disruptions may have on an organization. Under supply chain insurance, companies are covered against natural disasters, government regulation, pandemics, strikes and other events that may cause them to lose income.
- Better Communication with Suppliers: Knowing your vendor and how their business performs can be critical to your organization’s success. It is important to ask questions and inquire what strategies your vendors have taken to mitigate potential risks, as well.
- Diversifying the Supply Chain: It is also important that businesses don’t put too many eggs in one basket. “Businesses that diversify their upstream suppliers are less likely to experience supply disruptions and price spikes, while companies overly reliant on one or a few suppliers are exposed to higher supply chain risk,” says Windle.
As the economy and political climate continue to change, it is crucial that companies begin to proactively think about supply chain risks and the strategies they can implement to reduce their losses. After all, it’s not if, but when the next disruption will happen.