Today, supply chains are going global and increasingly complex, with the power to either disrupt the market or the organization itself. Organizations, in their quest to create a sustainable competitive advantage and increase their share of wallet, are opting for leaner processes and agile supply chains, thereby developing frameworks for supplier risk management (SRM) and enterprise risk management (ERM) to protect their supply network from the uncertain global business environment. What exactly is SRM and what’s all the fuss about, you ask?
Read on to know how SRM and its analysis is important for your organization
Supplier Risk Management (SRM), in simple terms, is a process of predicting and identifying factors that may have an adverse effect on the supply chain. This means the organizations should focus on the root causes and not try to mitigate risks after the damage has been done. It helps them to anticipate, identify, track and mitigate the possible risks in their supply chain. They are taking recourse to predictive analytics so as to understand nitty-gritties of the complex supply chain and distribution networks.
The organizations need to recognize the underlying challenges and establish an integrated supply chain risk management program by following certain industry best practices such as certifying suppliers, monitoring the supply chain and supplier performance, analyzing the information and mitigating risks by developing a contingency plan. There are a few points that the organization must keep in mind,
- It is essential for the organization to maintain a 360-degree view of their entire supply chain including active suppliers, downward suppliers and distributors. In short, monitor every link that has a direct or indirect impact on its supply chain.
- CROs must identify those suppliers that have the most impact on the organization’s supply chain and then categorize them based on their importance to the business.
- Collect and collate real time data and information from a variety of credible sources in order to track and monitor potential risk factors to gain a better understanding and thereby, derive actionable insights.
- Collaborating with key suppliers to monitor their practices, communicate expectations and set a standard of deliverables in terms of quality, control, compliance and efficiency.
- A Stitch in time, saves nine, they say. Indeed, companies must develop a contingency plan that will lay a foundation for steps or measures to mitigate risks in the future.
What SpendEdge Can Do for You?
At SpendEdge, our team of experts help organizations to effectively manage and combat supply chain risks thereby enhancing their performance through an extensive risk management portfolio, functional expertise and targeted research programs. Our supplier risk assessment engagements help the clients to gain regular updates on the performance and latest trends specific to the key suppliers and stay abreast of the developments in the specific market.
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