A healthy business needs a robust and agile supply chain. But today’s supply chains are plagued by ever-increasing complexity that’s brought about by a shifting landscape of geopolitical, environmental, human resource, IT and regulatory compliance issues. As a result, organizations are more exposed to new internal and external risks. Left unchecked, they can disrupt your operations, damage your reputation, and impact your bottom line.
By identifying, assessing, and mitigating risks to your supply chain, you can protect your business and keep driving productivity.
Keep reading to discover common risks, how to manage them, and how automation could play a crucial role in protecting your business.
Internal risks occur from within your organization and are usually easy to identify and manage. They could stem from:
- Changes in workforce
When highly trained employees with specialist skills and/or knowledge leave, it can be hard to find a replacement. This can impact the effectiveness of the supply chain as you search for new employees and train them.
- Lack of planning
If your business fails to forecast demand and conduct appropriate supply and production planning, you won’t be able to effectively respond to the needs of the market. This opens you up to unhappy customers and losing business to competitors.
- Poor cyber safety
Data breaches can result in heavy fines and cyber-attacks can bring operations to a halt. Failing to effectively train your team in safe IT practices raises the risk of a data breach or successful attack.
- Disconnected systems and siloed data
Inaccurate or disorganized information can lead to poor decision-making. This can result in production delays, goods being shipped to the wrong place at the wrong time, or customers being inaccurately billed.
External risks are often less predictable and harder to foresee. As a result, it’s vitally important to be as prepared as possible so you can react swiftly if any of these occur:
- Demand fluctuations
Unfortunately, we don’t have a crystal ball that lets us see into the future. Unexpected changes in demand can lead to excess stock and a decrease in cash flow, or to stock-outs, unfulfilled orders, and unmet customer expectations.
- Changing regulations
Your business has a responsibility to comply with trade regulations. But these often change and vary across countries. Failing to stay ahead and maintain compliance can lead to legal action, large fees, and damage to your brand’s reputation.
- Adverse weather
The elements can disrupt the transportation network you rely on to move your materials or goods through the supply chain. This can cause delays, damage to stock, or even a complete halt to your operations.
- Material shortage
Weather, demand, and supplier failure can lead you to experience a shortage of the essential materials and parts needed to continue production.
Managing these risks is a simple process, but it requires dedication and continuous diligence. By following this three-step process, you can help keep your supply chain healthy.
1. Identify
Analyze your supply chain, including the suppliers you’re working with, logistics agents, and internal teams to identify any of the above risks.
2. Assess
Once you’ve identified any risks, determine how each of them could negatively affect your supply chain (and how likely it is to occur). This will help you prioritize resources to address the risks.
3. Mitigate
Create an action plan for each of these risks. This could mean updating your team’s cybersecurity training or ensuring that another supplier is on standby if yours can’t meet demand.
Once you’ve completed these three steps, start again. New threats can arise at any time so it’s vital you continuously monitor risk and update your plan to avoid or deal with disruption.
Automation can give you increased visibility by connecting the systems across your supply chain. They collect valuable insights from each system and store them in an easily accessible platform. This clear picture makes it easier for you to identify and track risks.
Automation also makes it easier to remain compliant. When you automate workflows, you create clear standards that are followed for every single action, every single time. This means you can build compliance into your processes, ensuring regulations are followed, even when they’re updated.
By implementing automation, all your systems will be standardized. This means your processes, requirements, and regulations will be clear to all employees and suppliers, ensuring the correct practices are followed at all points of the supply chain.
Unilever International have a strong reputation and a vast supply chain network. Ensuring they manage supply chain risks is imperative as the impact could be huge.
To gain full visibility and adhere to complex cross-border regulations, they store all their shipping information and documents in a single platform. This means that compliance is baked into their workflow.
They also need to ensure that critical data is kept up to date and all decisions are approved on time by the correct people. How do they do it? By integrating key applications such as SAP, DocuSign, and Excel to streamline processes and limit the risk of missed deadlines or mistakes.
Finally, they automated their approvals systems. This ensures adherence to their business-wide pricing framework to guarantee no unexpected revenue loss or rogue pricing. This also helps them forecast and manage stock effectively.
Read the full story to find out how Unilever International cut cycle times in half with automation.
Bizagi’s supply chain solutions are not only perfect for risk management, but they also help you to orchestrate your supply chain processes to increase visibility, boost productivity and drive operational agility.
Discover how Bizagi can help you manage supply chain risk and unlock the benefits of automation by visiting our supply chain page.
