Risk Management Solutions

Supply Chain Risk Management Resources

A supply chain is the amount of resources, like finance, materials or information, which moves from the supplier, to the manufacturer, to the transporter and finally to the customer. The process through which this supply chain works includes activities like manufacturing, storage, buying, logistics and transportation, customer demand and a lot of planning concerning the entire supply chain management.

We live in a complex period of time with many events and changes that we can’t forecast, so, during the process of flowing of the goods and services, a lot of factors can intervene and endanger the normal functioning of the supply chain.

Supply Chain Risk Management is a part of the risk management which deals with identifying and forecasting the factors that can jeopardize the accomplishment of the main objective, which is, the goods and services to get to the consumer, as the source or the manufacturer or other intermediate part of the supply chain have planned before, without interruptions in the chain and delays that can cost money.

After the Supply Chain Risk Management identifies the unfortunate events, the next step it should do is to quantify the risk and search for solutions, options to diminish that factors or at least the consequences. Making a risk management plan is the most important step of this process.

Supply Chain Risk Management – Effective Plan

Supply Chain Risk Management

An effective supply chain risk management plan starts with defining the governance structure and its responsibilities and it’s enabled with a good reporting system which is especially time efficient in order to monitor the delivery along the supply chain and take action immediately a threat intervenes.

In addition to this, a successful risk management plan, better decisions and coordinate actions and orders are realized only with an up to date information system because the goods and sources pass from a company to another one, cross the boundaries of different regions which run the supply chain to amplified risks.

Management of risk within a supply chain has four options: avoidance which means not running the risk, reduction of the risk, acceptance of the risk and its cost or transfer if possible.

The specialty literature recommends coping with the risk and being one step ahead of the risk instead of not taking action because of the supplementary expanses that can reduce the profitability of the one who assumes the threats. When dealing with uncertainties it is very important to establish some acceptable limits in which risk can fluctuate because the main idea is to create value which means that the rapport between the effect and effort should be higher than one.

Finally, for better results, no delays and reduced negative consequences, risk management of the supply chain should be realized with the aid of a software system based on web interfaces which will provide planning of the applications and executions within the supply chain.

These web programs are based on shared data models for the inside and outside environment of a company in a supply chain risk management and are based on algorithms which find optimum solutions to deliver goods and monitor the phase of the fabrication.