Why is Supply Chain Risk Management Important for Businesses Today?

With the globalization of supply chains, the number of third-party logistics (3PL) providers has increased, substantially. However, business strategies such as outsourcing, supplier consolidation, and low-cost sourcing offer immense opportunities but have several risks associated with them. This has forced decision-makers to think about why is supply chain management important and what are some of the best practices to mitigate supply chain risk.

At SpendEdge, we understand the risks associated with a global supply chain and to help companies answer questions such as “why is supply chain management important?” and “how to mitigate supply chain risk?”, we have listed below some of the best practices for managing a supply chain.

Why is Supply Chain Risk Management Important?

With companies across the globe focusing on becoming more efficient, supply chains have become extremely vulnerable to risks. Most firms fail to perform an effective supply chain risk assessment before outsourcing their products and services. At times, they simply rely on annual risk registers, which are usually created for insurance companies. A failure to identify and minimize these risks can lead to supply chain disruptions and profit losses. By improving supply chain risk management capabilities, companies can easily analyze dynamic factors that may lead to risks.

Want to know more about supply chain risk management best practices and how you can mitigate supply chain risks? Request a free demo and access our SpendEdge Insights platform for free!

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Supply Chain Risk Management Best Practices

SpendEdge has identified some of the best practices to help companies manage risks in the global supply chain and achieve better consistency and value. They include:

Innovations in contract management: Companies can adapt to newer styles of contract design rather than following old-styled onerous ones. This will enable them to streamline contracts by understanding the significant cost of creating and negotiating old-style “legalese” contracts.
Supplier insurance and limitations of liability: Organizations using external suppliers for products or services, either upstream or downstream, necessarily need to evaluate potential liability exposure. Every contract must have provisions of protections by limiting liabilities, ensuring security against legal liabilities, and insurance of suppliers.
Visibility of suppliers’ financial stability: By leveraging predictive financial stability data, companies can gain highly positive SCRM visibility to a firm’s management team for free. Additionally, it can warn procurement professionals of potential supply chain failures.

What’s in it for you?

Gain detailed insights into the best strategies to improve visibility in the global supply chain.
Learn to reduce the complexity of a supply chain risk and prevent it altogether.
Proactively identify any global supply chain risk and ensure timely delivery of products.
Obtain a comprehensive overview of flow of materials and products.
Maintain business operations by efficiently addressing potential supply chain disruption.

Managing any type of supply chain risk is a taxing job and can result in major profit losses for companies. Request a free proposal to gain a comprehensive overview of our solutions portfolio for managing supply chain risk.

Why SpendEdge:

SpendEdge delivers robust, real-time procurement market intelligence solutions to help sourcing and procurement professionals to improve supply chain risk management capabilities. Our innovative procurement solutions help enterprises to transform the structural capabilities of businesses and improve execution efficiency. Our state-of-the-art supply chain risk management solutions also help enterprises to transform structural capabilities, improve execution efficiency, and achieve better cost savings. We provide businesses with actionable insights and techniques to improve their procurement capabilities.

Interested in gaining a comprehensive overview of supply chain management best practices for your industry?

Why is Supply Chain Risk Management Important & How Can it be Improved?

Why is supply chain risk management important

Supply Chain Best Practices to Drive Business Success

The importance of supply chain management in today’s competitive market landscape cannot be undermined. With the expectations of both shareholders and consumers soaring, the collective capability, technology, resources, and scale of most supply chains have become insufficient.

Moreover, it can be said that the exponential increase in business complexities is one of the biggest challenges facing the supply chain. This surge in the complexity has been further fueled by challenges such as supply chain globalization, acquisition pace, new retail channels (i.e. omnichannel), regulations, and a rapid increase in the pace and complexity of new product introductions. This has forced companies to adopt supply chain best practices and renew their supply chain approach.

At SpendEdge, we understand that adopting supply chain best practices requires both knowledge and capabilities. Therefore, our team of experts has highlighted the supply chain best practices that companies can adopt to increase value creation across the supply chain.

Want to know how supply chain best practices can help you manage complexities? Get in touch with our experts and implement supply chain best practices for your organization.

Supply chain best practices for companies

#1 Align supply chain responsibilities

Often, the decision-making power is divided among different people in organizations. This not only slows down the operations but also makes it difficult for companies to make quick decisions. Aligning supply chain responsibilities will ensure better supply chain management and greater efficiency for organizations.

#2 Utilize technologies

Companies integrate too many software to increase their efficiency without analyzing the needs of their organization. Instead, companies should analyze the efficacy of their processes that need improvement and then implement technologies that can address those needs. This is one of the supply chain best practices that can help companies to make better utilization of their supply chain.

#3 Devise strategic sourcing strategy

Strategic sourcing is imperative for supply management. It ensures the availability of supplies, lowers total cost, streamlines processes, and increases responsiveness to customers’ changing needs. Companies looking to implement supply chain best practices should focus on strategic sourcing rather than considering it the sole responsibility of the purchasing department.

Interested in devising a strategic sourcing strategy?

Request a free proposal and know how our experts can help you to devise state of the art sourcing strategies.

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#4 Consider value over price

It is never advisable for companies to cut costs at every point of time, especially if they are aiming to achieve long term business goals. At times, they need to put value over price to retain their customers, keep business flowing, and establish themselves as a reliable supply chain partner. This requires companies to implement supply chain best practices and achieve better profits in the long run.

#5 Better inventory management

Inventory management is one of the supply chain best practices that companies are intending to improve upon in the years to come. It helps companies to substantially improve the bottom line and minimize their working capital. Even the top-notch companies are paying attention to inventory at the highest levels as it could represent over 50% of the cost of an item.

#6 Taking social initiatives

Reducing a supply chain’s carbon footprint is no more a choice for companies. It is one of those supply chain best practices that necessarily needs to be practiced. The reason being, buyers and consumers take it into consideration while choosing products or services. Any company not having productive social responsibility programs risks criticism from one or the other sources.

Implementing supply chain best practices is pivotal to increase the efficiency of the global supply chain. To know how your organization can benefit from these practices, request a free demo from our experts now!

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Battling Supply Chain Risk in Five Simple Ways

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.

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Procurement Intelligence Solutions for a Retail Company – A SpendEdge Success Story

Procurement Intelligence Solution Transforms Finance Operations and Enhances Supply Management

About the Client

The client is an American multinational retail-clothing firm. With over 500+ stores, the company employs around 57,000 people globally.

The Business Challenge

With changing consumer behavior and technological innovations, retailers across the globe are uncovering new ways to sustain from the disruption. Moreover, retail brands are coping with a long-term uptrend in commodity and other raw materials input prices, and rapidly shifting global supply chain. These mounting global supply chain complexity with retail markets is forcing retail companies to be more agile and react faster than other players in the market. This is where procurement intelligence comes into play. In today’s competitive market scenario, procurement intelligence is the key to establishing long-term strategic sourcing and supply management plans.