Supply chain risk definition
Risk refers to the probability of any undesired event caused due to external or internal vulnerabilities which can be avoided by using preventive actions. Supply chain risk includes any type of risk that is associated with a company’s supply chain. These risks may be anything ranging from natural calamity in a region that the organization procures raw material for production activities to transportation strike due to which finished goods cannot be supplied to the market. Supply chain risk is the deviation from the expected or standard performance of these functions. Including demand planning, sourcing, production, supply planning, transportation, and reverse logistics.
What is supply chain risk management?
Supply chain risk management refers to an organization’s coordinated efforts to identify, monitor, detect, and mitigate any threats to supply chain that can consequently affect the company’s continuity and profitability. Cost volatility, supplier financial issues and failures, material shortages, and natural and manmade disasters are some of the primary examples of supply chain risk. Global supply chain leaders use supply chain risk mitigation strategies and software in order to foresee potential issues and adapt to these risks and unforeseeable supply chain risk as quickly and efficiently as possible.