If you were to add a subtitle to every supply chain professional’s job description it would be Risk Manager or Risk Mitigator. The reality is that supply chain management is not just about managing orders and transportation and inventory — it’s about doing all those things while also navigating through the many risks that could disrupt your supply chain or bring it to a halt.
What are some of the biggest supply chain risks companies face today?
“Supplier viability is a major concern of supply chain leaders and procurement professionals today when committing their direct materials to specific trading partners,” said David Cahn, Director of Product Marketing at Elemica, in a recent episode of Talking Logistics. “Supplier bankruptcy, declining balance sheet health, and a supplier’s ability to meet their obligations in a timely manner are all top-of-mind concerns.”
Cahn also highlighted on-time delivery risk: “Will a supplier be around to support my delivery schedules and can I trust them not to shut down my plant [due to a late or missed delivery],” he added. “Do we have the right Service Level Agreement metrics in place? Is the mode of transport the most efficient to impact on-time delivery? At what cost? Those are some of the questions supply chain executives are asking — or should be asking.”
The chemical and process industries, which are very regulated, have an additional layer of risk: the movement of very hazardous materials between buyers, sellers, and logistics service providers.
“There is a tremendous amount of material labeling and handling risk assumed by the shipper and logistics provider,” said Cahn. “At the LogiChem conference [a couple of months ago], there was a discussion about the risks logistics service providers take on when they sign up a new customer. Are the materials and containers labeled correctly? Are the materials loaded into the containers correctly to minimize product damage during transport? Are the containers used to store the materials properly maintained and certified? Those were some of the major risks identified.”
For related commentary, see the post I wrote last September titled, Still Think Dangerous Goods is Just Paperwork and Labels?
“Risk takes many forms in the supply chain — supplier, weather, geopolitical, security and more,” added Cahn. “Many multi-enterprise platforms like ours are starting to embed risk information from content services to provide more holistic risk information. When you combine that information with real-time visibility of shipments, it allows companies to react to supply chain disruptions more quickly and effectively.”
I discussed this trend in my supply chain and logistics predictions for 2018 post a couple of weeks ago: “Visibility solutions are starting to embed machine learning capabilities and leverage a broader set of data sources, including weather, traffic, location, and social networking,” which is providing companies with deeper, clearer, and more insightful information about what’s happening across their supply chain and what corrective (or, ideally, preventative) actions to take.
I encourage you to watch the rest of my conversation with David for additional insights and advice on this topic, including the growing risk of cyber attacks and how visibility, machine learning, and analytics are helping companies to better manage supply chain risks. Then post a question or comment and keep the conversation going!