Fortifying Supply Chains with Supplier Risk Management Strategy
Did you know that 88%1 of the world’s leading companies are not sufficiently protected against supply chain disruptions? As per this World Economic Forum report, including supplier risk management in your B2B supply chain management strategy is a key to building a resilient supply chain.
B2B supply chain management is the process of identifying, assessing, mitigating, and monitoring potential threats and opportunities your suppliers pose. So how can supplier risk management shock-proof your supply chain? Continue reading to find out.
Mitigating Supply Chain Disasters
Supplier risk management is about proactively identifying potential risks, creating strategies to mitigate these risks, and building a supply chain that can withstand disruptions and adapt to changing circumstances.
Why is it important? Besides contributing to the company’s overall growth and sustainability in an uncertain business environment, supplier risk management can help a company in the following ways:
- Reduce reliance on a single supplier and diversifying sources of procurement.
- Helps identify potential disruptions and develop strategies to mitigate their impact, ensuring continuity of operations.
- Minimize costs due to production delays, expedited shipping, or sourcing from alternative or expensive suppliers by anticipating and preparing for potential risks.
Boosting Business Performance Through Supplier Risk Management
Over 50% of businesses consider supplier collaboration a key focus to improve B2B supply chain management. Because it empowers them to make the supply chain more consolidated, resilient, and optimized, which results in the following benefits:
- Increased Visibility: While managing supplier risk, you’ll have access to real-time supplier data that can help identify and alert potential risks and opportunities in real-time. You could also get possible actions and outcomes based on supplier data and risk scenarios.
- Reduced Risk: A robust supplier risk management system ensures you rely on suppliers vetted and monitored for their performance and compliance. This can reduce the number of contact points and potential failure points in the supply chain.
- Increased Efficiency: You’ll observe positive changes in the quality of products because you’re now identifying and mitigating supplier performance issues before they impact your operations.
- Reduced Cost and Complexity: Supply chain management software simplifies the procurement process and reduces inventory and logistics costs by optimizing the order quantities, delivery schedules, and transportation modes.
Managing risks in modern, multi-tier supply chains is a complex challenge, as the probability and severity of risks are hard to predict. However, supplier risk management can help organizations adopt a structured approach to deal with known risks and prepare for unknown ones. One of the ways to implement supplier risk management is to partner with a trusted supply chain solutions provider, such as Moglix.
For instance, Moglix helped a leading chemical company in India to improve its supply chain metrics by consolidating its vendors, categorizing line items, and optimizing inventory. These solutions led to a 95% punctual delivery, a 15% quicker process, and a 6% spending reduction for the company.
If you are curious about how Moglix can help you manage your supplier risks and build a resilient supply chain, schedule a demo here.