Imagine a company sends out a truck shipment with high-value goods on board. Everything is going according to plan–the truck is scheduled for on-time delivery and the goods are safe and secure. But then, something goes wrong. It could be extreme winter temperatures disrupting the stability of the goods. Or, it could have something to do with a driver taking an unscheduled, long stop on the journey.
Regardless of the problem, the company needs to be prepared for anything. By prioritizing risk management, it is possible to mitigate the problem before it worsens. A recent Deloitte Touche Tohmatsu Limited survey found that 85 percent of surveyed global supply chains had experienced at least one disruption in the past 12 months.
Wondering how much this could help? Deloitte’s study found that companies that proactively manage supply chain risk spend 50 percent less to manage supplier disruptions than companies that stated that they aren’t proactive.
2 Strategies for Reducing Supply Chain Risk: Reducing Vulnerability & Ensuring Continuity
So, how do you best mitigate supply chain risk? Reducing vulnerability and ensuring continuity are two common strategies.
Vulnerability in the supply chain can stem from a number of causes. Some common ones are:
- Reliance on a singular supplier or plant
- Lack of proper contingency planning
- Dependence on custom parts for a product
With a singular supplier, just one plant shutdown can make an entire operation fall apart. And, based on a company’s reliance and scope of products produced from that single plant, it can result in a substantial revenue hit, the loss of valuable shelf space among other long-term, negative impacts.
To avoid plant shutdowns, companies can transfer shipments to nearby plants, or adjust their shipping schedules. Monitoring shutdown activities in detail and ensuring equipment is ready for use when the plant reopens helps reduce the length of disruption.
For industries and companies with specific or custom manufacturing parts, contingency plans should be in place in case these parts suddenly become unavailable.
Even with basic risk management policies in place, sometimes companies may need more tools to properly mitigate supply chain risk
Navigate Complex, Global Supply Chains with In-Transit Visibility
In addition to specific industry and manufacturing risks, the increasing complexity of global supply chains affects the ability to track shipments. Global interconnectivity has brought more flexibility and greater scales of operations both of which are good for organizations. At the same time, the sheer volume of parties in today’s diverse and complex ecosystems using different communication standards, make it harder to keep track of shipments.
With more moving pieces in the supply chain puzzle, more things could go wrong, which in turn could make an entire plan crumble.
To manage these risks most successfully, companies can use real-time, in-transit supply chain visibility solutions to predict problems and quickly identify solutions. Real-time information gives companies the advance notice they need to identify and respond to risks of disruption in their supply chains.
These complexities create an immediate, pressing need for more details about planned routes. This information seems easily accessible on the surface, but to receive full information, a little more digging is necessary. With real-time, end-to-end visibility, companies can reach beyond their competitors. Comprehensible information derived from supply chain logistics platforms gives companies the tools they need to mitigate risks and avoid disruptions as much as possible.
Through consistent communication and an eye on the goal of future, connected, collaborative supply chains, companies with complex, global supply chains can use in-transit visibility to:
- Better manage transportation plans
- Alleviate risks
- Prevent disputes
With the help of logistics and trends derived from historical data, a supply chain can remain resilient and robust. By creating, strengthening and diversifying relationships with potential suppliers, and taking advantage of supply chain analytics and insights, companies can use integrated risk management strategies for competitive advantage.