It also addresses board-level topics, such as operational resilience, business continuity, and product lifecycle management. While you may be unable to predict specific disruptions, a comprehensive and effective supplier risk management program will help your organization prepare for unexpected events.
While just-in-time supply chains and global outsourcing reduced costs and increased efficiency during times of stability, these practices have left supply chains exposed to existential threats in recent years. The COVID-19 pandemic, geopolitical unrest such as the war in Ukraine, climate change, natural disasters, and other events have spurred many companies to revisit their approaches to SRM. Today, supplier risk management means the difference between success and failure for many organizations. Why Supplier Risk Management Is Critical in 2022
Additionally, advance planning can pave the way for organizations to implement automated supplier risk management solutions to shoulder part of the load. Gaining a clear understanding of supplier risk enables the organization to better prepare for and respond to disruptions to product and service delivery. A Supplier Risk Management Strategy Outline.Understanding Profiled, Inherent & Residual Risk in the Supply Chain.Industry-Specific Supplier Risk Management Concerns.Why Supplier Risk Management Is Critical in 2022.The rest of this post will cover the following topics: Well-designed programs also include risk mitigation and risk transfer processes, as well as the ability to measure and analyze key performance indicators (KPIs) for ongoing program optimization. Through supplier assessments, continuous monitoring, data analysis and risk mapping, effective SRM programs prioritize interdependent risks that can lead to supply chain disruptions and downtime. The goal of SRM is to maintain supply chain continuity in the event of an incident that could negatively impact business relationships, customer service and profitability.
These sequences can be short and simple, such as a farmer selling goods at a farmer’s market – or they can be long and complex, such as consumer products organization that designs and markets its products but then relies on hundreds of third, fourth and Nth parties for raw materials, assembly, packaging, and distribution. Supplier Risk Management (SRM) is the practice of identifying, analyzing, and addressing the risk of data breaches, operational failures, and other business disruptions that can affect an organization’s suppliers – and therefore limit its ability to deliver products and services to its customers.Ī supply chain is broadly defined as the sequence of processes required to produce a product or commodity.
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