Tag: supply chain risk management process

supply chain risk management

CPG Company Utilizes SpendEdge’s Supply Chain Risk Management Solution to Achieve Cost Savings of Over 11%

The Business Problem

The client is a well-renowned company in the consumer packaged goods (CPG) industry and produces a wide range of products in the beauty, grooming, and household care units. The client’s business units were spread across 50+ countries across the globe. However, they were facing challenges in price and quality benchmarking for their products and machines. The need to identify suppliers who were critical for their business processes and associated risks compelled them to engage with SpendEdge. The key aspects they were looking to address through this engagement were:

Risks Associated with OEM Supplier and DFC Rolls: The double face corrugated (DFC) rolls used during shipment to prevent boxes from getting damaged lacked superior quality. In addition, machine cutting consumables were directly purchased from the original equipment manufacturer without any price benchmarking; thus, increasing the possibility of supply chain risk.

Cost of Reusable Gloves: The single-use gloves used by the client were becoming cost prohibitive and they were facing challenges identifying new suppliers who were within their budget limit.

Improving your supplier identification process can help you achieve substantial growth. To know more about how we can help your business with our supply chain risk management solution, request a free proposal below!

Solutions Offered and Client Journey

The experts at SpendEdge carried out a comprehensive risk assessment and identified suppliers who were critical for the company. In addition, they identified risks associated with key stakeholders and those associated with supply capacity, fluctuation in supply capacity, and their subsequent impact on prices.

In a span of three weeks, the experts at SpendEdge offered a solution to improve the client’s supply chain risk management capabilities. They also recommended utilizing an existing and pre-approved chemical supplier to provide/produce nitrile reusable gloves. The insights offered helped them to identify appropriate suppliers and evaluate their performance proactively. With our help, the CPG company was able to secure alternate suppliers and reduce the likelihood of supply chain disruptions. 

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Key Findings and Outcome

SpendEdge’s supply chain risk management service enabled the client to identify new suppliers and assess their delivery capabilities. The initiation of quality testing and price benchmarking helped create competition among the existing suppliers and provided opportunities for efficient contract management. The supply chain risk management solution helped the client to:

  • Achieve cost savings of more than $9,000, while exploring the usage of reusable gloves.
  • Reduce dependence on OEMs and achieve cost savings of more than 11%.
  • Shortlist suppliers with low financial risk and identify cost-saving opportunities.
  • To know more about this engagement, get more info.

Types of Supply Chain Risk

Supply chain risk management

Why is Supply Chain Risk Management Important?

Supply chain risk management is an essential part of any strategy and plays a crucial role in determining the financial health of any company. It helps determine the success of your business by helping you to proactively strategize plans for business risks. Supply chain risk management is imperative for companies looking to ensure the smooth functioning of their business units. To know about supply chain risk management best practices, click here.


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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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3 Best Practices for Supply Chain Risk Management Planning

When it comes to supply chain risk management planning, a risk can be defined as a broad spectrum of events, from counterfeit products, natural disasters, supplier delay, to theft, part shortages, production interruptions, and even cybersecurity. Every business has a different array of potential risks depending on its verticals, and each of its product has a different risk portfolio depending on its components. The product lifecycle is influenced by an incredible number of variables. Therefore, a comprehensive supply chain risk management planning is required, and many companies, today, are embarking on the journey to reduce the overall negative impact on the bottom line and effectively deal with unexpected hiccups. For companies that don’t have supply chain risk management plans, their primary objective should be to discover the largest risks and figure out strategies to deal with them. In this article, we have discussed some next-level best practices that can push supply chain risk management plans to another level of value and consistency.

Best Practices for Supply Chain Risk Management

Best Practice #1: Site checks must be performed

There are certain kinds of issues in supply chain risk management that can only be discovered with routine, in-depth personal visits, and an understanding of the culture where production occurs. The routine site visits are one of the most impactful methods of not only identifying supply chain risk but also help in developing contingency plans. Undoubtedly, this can be expensive and time-consuming in the case of a supply chain that reaches overseas, but the outcome can be enormous. This is one of the best practices which ensures that if there are any concerns with unsafe working conditions or quality, the companies can immediately take the necessary steps to revise their risk quantification.

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Best Practice #2: Don’t neglect cyber threats

Risks are not always physical but virtual too. There are many stakeholders when it comes to supply chain risk management who assume that supply chain risks come from physical challenges, such as delay in production and shortages, but this is short-sighted. Every supply chain is built on top of IT, whether it is a bill of materials shared between the company and the third-party suppliers, or CAD designs comprising proprietary, patented designs. Threquest proposalerefore, for a better supply chain risk management, companies need to roll cybersecurity risk into the overall supply chain roadmap and prioritize them higher than several physical risks.

Best Practice #3: Ease out supply chain risk with insurance

Insurance companies specialize in risk quantification and working with someone can help procurement companies in their process of putting together proper contingency plans. Some insurance policies cover the own production of the company, such as a custom-built and expensive piece of equipment that would cost millions and take weeks to replace. Therefore, this best practice in supply chain risk management can enable the company to recoup many of the costs involved in case of a critical failure. There are also other insurance policies that cover issues upstream, such as delay in the supply of parts from overseas suppliers. In either case, insurance can never make up for damage to a brand, but it can help lessen the sting of a major supply chain disruption, both in-house and the other side of the globe.


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6 Major Causes of Supply Chain Risk and Ways to Overcome Them

Supply chain risk is an inevitable component of a business, and these risks evolve and become more prevalent with time. In this dynamic scenario, yesteryear’s supply chain risk management strategies often prove to be ineffective. Businesses having a poor grasp of hazards in the supply chain will increase freight spend and diminish the brand value. However, having an idea about the supply chain risk that companies endure in the global market will help reduce their impact. This will also enable shippers to mitigate the likelihood of occurrence and minimize disruptions simultaneously.

Unfavorable weather conditions

Extreme weather is a significant supply chain risk to ocean freight activities. Tropical storms can prove disastrous for ocean carriers. The recent reports on the global climate change indicate tropical storm threat is on the rise. One of the ways in which shippers can avoid such supply chain risk is through re-evaluating ocean route used and determining which carriers can increase shipping in anticipation of tropical storms.

Connectivitysupply chain risk

In the age of modern trade, supply chain risk exists within the connectivity of systems. The integration and modification of systems increase the risk even though systems can be integrated through an open-source software. Furthermore, poorly integrated systems could lead to bottlenecks and disruptions in the supply chain. To stay prepared for such contingencies, companies must create a backup data resource and decentralize the data storage. It is also vital to ensure that the system connectivity is on a secure network. Furthermore, companies must give emphasis to avoid unnecessary modifications, and work with expert supply chain systems’ integrators in order to maximize profitability and efficiency.

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5 Techniques for Effective Supply Chain Risk Management

Risk is essentially a part and parcel of every company’s supply chain. Companies often lose millions of dollars due to cost volatility, non-compliance fines, supply disruption, and incidents that cause damage to the reputation of the brand as well as affects their smooth functioning. This is making supply chain risk management a top priority for businesses. Furthermore, cross-border supply chain activities often have higher risks associated with them. With more number of small and medium-sized businesses rapidly venturing into international markets, sRequest Demo_SEupply chain risk management is becoming more important than ever before for them.

What is supply chain risk management? 

Supply chain risk management is concerned with the synchronized efforts of a company that helps detect, monitor, identify, and eliminates factors that pose major threats to supply chain profitability and continuity. Supply chain risk management strategies help an organization foresee potential issues and adapt to the risks as well as unforeseeable supply chain disruptions as early as possible

Techniques to undertake effective supply chain risk management 

The following are the key steps involved in a successful supply chain risk management process:

Evaluate potential suppliers 

Before companies decide to replace existing suppliers, they must gain in-depth knowledge about the new suppliers. This will help companies answer critical questions about the supplier’s business practices. It is important to evaluate critical factors such as the supplier’s track record in meeting contractual obligations, the quality of goods provided by the supplier, and conflict of interest in the policies of both the parties. Also, forming strategic partnerships with a select group of best suppliers can allow companies to capture a wide variety of benefits—including the potential for scale advantages and priority service.

Monitor quantity and quality standards 

Another important technique for better supply chain risk management is for companies to carefully monitor the adherence of agreed quantity and quality standards by the supplier. Despite agreeing on certain standards, several suppliers fail to match the promised requirements. This makes it difficult for companies to maintain their own high standards while delivering the final product to the end-consumers. Dissatisfied customers can even tarnish the brand name of the company. Hence, by monitoring the supplied good constantly, companies can maintain their quality standards and pave the way for better supply chain risk management.

Prevention or quick resolution of disputes 

Disputes are bound to occur at different stages of the supply chain. Proactively preventing disputes from occurring or resolving them amicably can mitigate dispute-related risks and promote smooth operations. Companies must equip themselves with the right processes and technologies that are essential to quickly identify the sources of disagreement that could disrupt the supply chain.

Keep track of the products received 

It often happens for businesses that they might not receive exactly what they have ordered for. Such incidents result in supply chain waste or fraud. So, it essential to keep a close track of the consignment received so that the companies do not have to end up paying for items that they have not ordered. Having a complex network of contractors can increase the risk of inappropriate markups, duplicate billing, and improper related-party billing.

Avoid sales process risks 

Companies must prepare themselves for the risks that arise from sales operations for effective supply chain risk management. The sales operations of a company act as a crucial link in a loop that returns to the suppliers. This is because the customer demand ultimately affects the company’s purchasing requirement. Also, they can get introduced to new sales risks in a new environment. For instance, if a company establishes itself in a new market, it will have an impact on the procurement-supply dynamic of the business. Companies must accurately forecast and be prepared to face the demand fluctuations in different markets.


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