Supply chain risk management is a top priority for leaders in many industries, including industrial equipment manufacturing, however a recent report claims many are not utilising it enough during a time when managing risk is becoming more important than ever. The industrial equipment manufacturers that see the best return on their investment in risk management are those that make it a priority, centralise responsibility and invest aggressively.
When sourcing internationally, industry leaders need to assess and prepare for the risk of unforeseen price fluctuations, natural disasters and other catastrophic events that can disrupt manufacturing operations. These risks are common to every industry sourcing internationally and are an important foundation of risk management. Organisations also need to be rigorous with their compliance and due diligence policies and practices. A recent study showed that just 61% of firms make risk management a priority. Recognising the need for risk management and making it a strategic imperative helps firms gain greater visibility and predictability across supply chains.
Industry leaders invest heavily in effective supply chain management, with a specific focus on end-to-end supply chain visibility and analytics. This enables them to pre-emptively identify developments and be proactive in their response to them.
Whichever approach a company decides to take, risk management is essential. Business disruptions can have ripple effects across a supply chain, impacting key areas of business such as quality, proficiency and reputation. Risk is an issue presented to all businesses, but how this risk is managed and mitigated will determine how a business will fare in future moments of crisis. As the global business landscape evolves and supply chains become more complex, commitment to supply chain risk management will become more important.
Rigorous compliance, due diligence and supply chain management policies and practices are instrumental if manufacturers are to avoid the reputational damage associated with supply chain risks. Monitoring negative media stories around industry critical areas and locations can help a business keep a close eye on suppliers. This avoids adverse publicity over environmental and social performance, as well as contributing to a pro-active culture of risk identification.
Preparing for cataclysmic events such as natural disasters requires more than planning and crisis management. Companies need to understand what areas of business will be impacted should a supplier go down for a period of time. By understanding the precise risks it faces, a firm can move to prioritise, apply resources, and reduce its vulnerability. Even a short-term outage can have a disastrous effect on a business' financial report.
Supply chain risk management is a dynamic process that requires revisiting management and insurance programs to make adjustments in accordance with fluctuations in economic and financial conditions. Monitoring the media using the respected Nexis database from LexisNexis offers businesses increased visibility over the farthest reaches of the supply chain. Active monitoring can alert a manufacturer to a potential risk in time to pro-actively mitigate it, before it is too late, while also fostering a business culture of prediction, rather than reaction.
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