10 Supply Chain Risk Management Strategies

The supply chain is the gas that makes the motor run for manufacturing and retail. Without it, you have no product to sell, no inventory to stock, and no revenue to earn. Unfortunately, there will always be disruptions to the supply chain that throw everything out of whack and force both retailers and manufacturers to scramble to pick up the pieces. In a Gartner survey, only 21% of respondents stated they had a highly resilient network, though more than half expected to be “highly resilient” within a few years. That’s a positive sign, but what exactly can be done to get ahead of those supply chain risk factors?

Proper supply chain risk management enables businesses of all shapes and sizes to take advantage of tried-and-true strategies that mitigate risk and set them up for success. In order to develop your own risk management strategy, it helps to first understand what supply chain risks you might face.

What Are Some Supply Chain Risks?

Supply chain risk management refers to the process by which businesses take strategic steps to identify, assess, and mitigate risks within their end-to-end supply chain. There are both internal and external risks that can disrupt your supply chain, so it’s helpful to understand the difference between the two.

External Supply Chain Risks

As the name implies, these global supply chain risks come from outside of your organization. Unfortunately, that means that they are harder to predict and typically require more resources to overcome. Some of the top external supply chain risks include:

Demand Risks: Demand risks occur when you miscalculate product demand and are often the product of a lack of insight into year-over-year purchasing trends or unpredictable demand.
Supply Risks: Supply risks occur when the raw materials your business relies on aren’t delivered on time or at all, thereby causing disruption to the flow of product, material, and/or parts.
Environmental Risks: Environmental risk in the supply chain is the direct result of social-economic, political, governmental, or environmental issues that affect the timing of any aspect of the supply chain.
Business Risks: Business risks occur whenever unexpected changes take place with one of the entities you depend on to keep your supply chain running smoothly — for example, the purchase or sale of a supplier company.

Internal Supply Chain Risks

This refers to any supply chain risk factors that are within your control, and that can be identified and monitored using supply chain risk assessment software, robust analytics programs, IoT capabilities, and more. Although internal supply chain risks are more manageable than external ones, they’re still — to some degree — unavoidable. Here’s what to look for:

Manufacturing Risks: Manufacturing risks refer to the possibility that a key component or step of your workflow could be disrupted, causing operations to go off schedule.
Business Risks: Business risks are a product of disruptions to standard personnel, management, reporting, and other essential business processes.
Planning and Control Risks: Planning and control risks are caused by inaccurate forecasting and assessments and poorly planned production and management.
Mitigation and Contingency Risks: Mitigation and contingency risks can occur if your business doesn’t have a contingency plan for supply chain disruptions.

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