Supply chain risks and disruptions
A disruption to the supply chain can stem from internal or external events. The more complex a supply chain - whether this means international networks or a high frequency of touchpoints - the more susceptible a chain is to risks.
Internal risks to the supply chain
Internal risks are those which a company have control over, including the ability to mitigate them. These include manufacturing risks i.e. internal operations, business risks i.e. changes to critical employees and planning risks I.e. incomplete or inadequate assessments or analysis.
Once internal risks and threats are identified, a comprehensive and proactive SCRM plan can monitor these and recommend actions to address them before they arise.
External risks to the supply chain
External risks are those which a company does not have the ability to control. Even with a SCRM plan in place, they can be difficult to identify and monitor. However, should they occur, being prepared for a well-managed approach is essential.
Such risks include environmental risks - which could be changes to social, economic or even the climate, including natural disasters - as well as demand and supply risks caused by disruption of materials or even misinformation at any stage of the chain.
Risk management planning can help navigate these external changes and communicate with an entire network in order to remain operational when faced by challenges outside of the control of the business.
A lack of transparency
Many contributors are involved within a supply chain in order to produce the final product. Managing all stakeholders can be challenging, however poor communication and lack of alignment can be damaging.
A potential lack of transparency can not only be damaging to the organisation itself, but also the reputation of those it is associated with. The expectations of consumers are shifting, with the origins, manufacturing and distribution processes, treatment of employees and many other aspects are deemed just as important as the quality of product or service itself.
A SCRM plan should include in depth analysis of each supplier before an agreement is set. This data can expose internal and operational practices to ensure they align with a business' needs, objectives and ethics before forming a partnership. A lack of information is not a risk worth taking.
The risk of expanding globally
Many companies continually look to expand operations, whether entering new markets or going global. When entering a new market, there can be an array of different risks and challenges. Increasing the complexity of a supply chain can open a company to new financial and legal risks. It could impact physical processes including importing and exporting goods, even present challenges in managing relationships and cultural differences.
As a company makes strategic decisions in order to grow, there must be changes to a SCRM plan in order to address new, related risks in these environments.
While navigating these differences from country to country, regulatory obligations are also constantly shifting. This can add a layer of complexity when moving into markets across the world and remaining compliant.
The benefits of a secure supply chain
Developing and implementing a supply chain risk management system can place a business in the best position to form a proactive approach to risk.
While taking a proactive stance can identify and mitigate risks effectively, it also shows a business is focused on protecting the security of their supply chain. Utilising a comprehensive plan and understanding related risk can help gain a competitive advantage, prioritise the brand's reputation and drive growth.
Collaborative efforts between key stakeholders can also create value within a supply chain. Ongoing communication enables a business to form new relationships and enhance coordinated efforts between all stakeholders to design a strategy that can see all parties succeed and grow.
The role of Standards in supply chain security
Standards provide the benchmark for which every aspect and output of a business should meet. They are informative documents which can provide a framework for any business in the supply chain to improve efficiencies and consistently deliver through structured processes and strategies.
Standards can not only assist a single business within the chain but support overall management efforts and focus on improving operations at every touchpoint from start to end.
For example, the raw materials which are sourced from one business must meet certain requirements in order to function or fulfil the next business' requirements. Another example would be the need for efficient logistics management to meet tight deadlines or providing alternative solutions if the transportation of goods has not met the right timelines.
There are a range of Standards which can assist in all aspects of supply chain risk management. These include:
ISO 28000 which specifies the requirements for a security management system, including those aspects critical to security assurance of the supply chain.
Set of ISO/IEC 27036 Standards provide guidelines and requirements for information technology and security techniques to help improve, maintain and review supplier relationships.
ISO TS 22317:2015 provides guidelines for a business impact analysis for a business continuity management system and provides guidance to help establish, implement and maintain a formal and documented BIA process. This analysis is critical to collect data to help predict the consequences of a threat to the business.
ISO 28001 describes the requirements and guidance for implementing supply chain security, assessments and plans within international supply chains to establish a minimum level of security.
ISO 31000 gives guidance on managing risks faced by organisations which can increase the likelihood of reaching business objectives, improve the ability to identify risks and allocate resources to tackle issues in any stage.
Prioritising the need for a secure supply chain
The ability to identify and mitigate risks while working collaboratively within a network of suppliers is an invaluable asset for any business. An understanding of risk and a focus on supply chain security can drive growth and performance of a business, while gaining competitive advantage, prioritising brand reputation and building long-lasting relationships.