| Today’s turbulent economic state has posed a | | | | Once the key sources of risk have been identified, |
| significant threat to countless businesses worldwide - | | | | it’s important for executives to assess their |
| whether in terms of staffing and internal operations, | | | | impact and build supply chains that can accordingly |
| product demand, or continuity of supply. But the poor | | | | withstand the turbulence. Subsequently, it’s vital |
| economy isn’t the only contributor to the sharp | | | | that all employees of a given company weave risk |
| decline in business and disruption to supply chains. A | | | | mitigation into their daily activities, rather than the |
| scarcity of resources, unpredictable product | | | | company regarding risk management as a one-off |
| demands, tightening international regulations, rising fuel | | | | movement. Moreover, supply chain modeling and |
| costs and political events are all culprits. | | | | scenario analysis should be implemented to quantify |
| So what are the key sources of risk for business | | | | alternative plans and their impact and cost to a |
| supply with regards to these contributors, and what | | | | business. |
| practical steps can businesses take to prevent, slow, | | | | There are a number of technological tools and SCM |
| or reverse supply chain disruption? | | | | software that are designed to - or which can help - |
| Key sources of risk don’t always have to entail | | | | assess the impact of risk on a business supply chain, |
| large-scale, uncontrollable disasters. In reality, the | | | | as well as to evaluate alternate strategies to help |
| most common threats to supply chain management | | | | executives make final assessments of the gravity of |
| (SCM) has more to do with controllable, often | | | | pre-emptive strikes. |
| predictable matters - even if an initial mishap is | | | | Throughout the process, it’s also vital to |
| completely out of a company’s control. For | | | | remember the importance of supply chain agility. In |
| example, if a natural disaster hits an area where a | | | | fact, many experts argue that agility should be |
| company is stationed, that company is likely to | | | | valued over efficiency, as events move quickly and |
| experience some serious impact. However, by | | | | can turn supply on and off with little or no warning. |
| identifying and preparing for setbacks of particular | | | | Efficiency in supply chains, however, is often built on |
| threat to a business, that company can get through | | | | predictability, repeatability, and a solid supply chain |
| the disaster with minimal damage - even if the natural | | | | network - which is, increasingly, found to be lacking in |
| disaster was on a large scale. | | | | the actual functionality of businesses. Responsiveness |
| If the company in question would suffer most from | | | | should also be improved so that the impact of |
| routing of supply, they can plan for such a risk in | | | | unplanned events can be minimised as much as |
| case any circumstances threaten. The key is to | | | | possible. |
| carefully assess risks to a given business, and plan for | | | | Finally, a framework for continual and formal |
| damage control based on those risks. And while not | | | | assessment of supply chain risk should be developed. |
| all risks are predictable, some certainly are. A | | | | Because risk varies from industry to industry, there is |
| company will have to keep a close account of | | | | no single way to predict or deal with it. So, a |
| events having a long term impact on them; ultimately | | | | qualitative and quantitative method of risk |
| facilitating the prediction and control of risks. | | | | identification and management is necessary. |