Supply chain management is a risky business, and if recent statistics are to be believed, this risk is increasing. Deloitte has revealed that 48% of retail and manufacturing executives claim that the frequency of risk events with negative outcomes has increased over the last three years, and 53% believe that the costs of these disruptions has also increased. These statistics resonate particularly strongly given this year’s high profile joint catastrophes of the horsemeat scandal and the Bangladesh factory collapse. Very often, companies struggle to find a balance between prioritising cost management and risk management. So what’s the solution? ediTRACK’s industry expert Sarah Heath suggests that defining this balance is the key to minimising risk.
Spending money on risk management can save money further down the line, on costly logistics lead times for example. Many companies switch from local trusted suppliers to lower cost suppliers often situated further away, and out of sight. This saves them money in the short run, but it increases potential points of failure in the supply chain, and overall supply chain risk as a result.
In this article, Sarah will discuss risk management in the supply chain: how to get a workable balance between risk management and cost management, and the most effective measures a business can take in order to minimise risk and safeguard the security and ethics of its supply chain. Sarah discusses the key steps to take to ensure risk management, which include close managerial attention, full integration of risk management into operations planning and management, and the use of supply chain risk management software.