Four Ways to Manage Supply Chain Risk

After the experience of dealing with a global pandemic such as Covid-19, it has become necessary to take measures to protect against future risks to supply chains from a demand, supply, and financial perspective. This can be done through having a strong and effective supply chain risk management strategy with four key steps:

1. Detect and document relevant risks: All possible risks need to be identified comprehensively from the supplier, the supplier’s production, or even the service location.
2. Evaluate the risk: In this step, you need to be able to analyze the individual risk factors, and examine which can become a point of failure in the supply chain.
3. Observe the risk: Since risks constantly change, it is necessary to continuously monitor how the requirements of customers are evolving in order to maintain an updated and current risk picture.
4. Reduce the risk: By maintaining regular reviews, you will be able to identify suppliers/suppliers that can pose the biggest risk for your business. Once this is completed, it is vital that relevant risk mitigation plans are created and shared with top management teams.