Supply Risk & Resilience
Why is it Important to Work With Supply Risk & Resilience?
Supply risk and resilience is crucial because it helps organizations manage and mitigate potential disruptions in their supply chain. This ensures continuity of operations, protects revenue, and maintains customer satisfaction. The importance of resiliency spans the extended enterprise across multiple tiers in the supply base and all the way to customers, addressing various risk categories such as financial, operational, regulatory, and industry risks.
How to Mitigate Supply Risk & Strengthen Resilience?
Companies often face similar challenges with regards to supply risk and resilience. Many companies suffer from not having management providing an explicit ambition with regards to various risks and stating the risk appetite clearly pointing out the priorities. This in turn limits the investments needed and the capability to properly identify, assess and mitigate supply risks and strengthen resilience. Furthermore, multiple risk types are often being handled in silos by different functions, though the risk itself is spanning a wide range of processes supported by separate systems with insufficient integration in between.
Building the necessary capabilities and skills to better manage supply risk and strengthen resilience in operations often entails development activities covering strategy, governance, process, people and technology. In essence there needs to be a structured and integrated process to identify, assess, mitigate, and control risks throughout the supply chain:
- Risk identification: Identify potential risks across all areas of the supply chain.
- Risk assessment: Evaluate the likelihood and impact of these risks.
- Risk mitigation: Develop strategies to mitigate identified risks.
- Monitoring and review: Continuously monitor the supply chain for new risks and review the effectiveness of mitigation strategies.
- Collaboration: Work closely with various departments, including Supply Chain, HR, Finance, Procurement, Legal, Risk Management, Research & Development, IT, etc to ensure a comprehensive approach.
What Are the Success Factors to Manage Supply Risk & Resilience?
There are a few things that the companies being successful in managing supply risk have in common:
- Management commitment: Agreeing on the risk appetite and ambition and ensuring that management is committed to maintaining supply chain resilience.
- Governance: Clarity on policies and structures enforcing compliance that is also integrated in operations and ways of working.
- Holistic approach: Adopting a risk-balanced approach that considers likelihood and financial impact.
- Technology utilization: Using technology to automate risk assessments and create notifications and actions as per the risk-based approach.
- Continuous improvement: Regularly updating and improving supply risk management strategies based on new data and insights.
What is the Value of Supply Risk Mitigation & Resilience Management?
In summary, supply risk and resilience are essential for maintaining operational continuity and protecting revenue. By identifying, assessing, and mitigating risks, organizations can ensure a more resilient supply chain. Key success factors such as management commitment, a holistic approach, and technology utilization contribute to effective supply risk management. Our comprehensive approach delivers significant value to clients by enhancing their ability to manage disruptions, maintain customer satisfaction, and achieve long-term business success.
