A company’s supply chain encompasses the entire process of acquiring raw materials, making products, and selling goods across every stage of your product lifecycle, including the manufacturing and distribution process. Both physical and virtual goods are a part of your supply chain, as well as the order management systems and processes necessary to service products that are created and sold.
A properly functioning supply chain is critical to fulfilling customer orders. Potential risks that can threaten a supply chain include natural disasters, logistical errors, lack of raw materials, late shipments, and pandemics like COVID-19. The key to maintaining a strong supply chain is to create an effective supply chain management system, to help mitigate the inherent risks at play.
What Is Supply Chain Risk Management?
Supply chain risk management (SCRM) is the process of overseeing and organizing your company’s supply chain. Every step in your supply chain, from procurement to inventory management to distributors, should be accounted for and appropriately monitored. Your enterprise resource planning (ERP) should include a thorough accounting of your entire supply chain.
This level of supervision may initially seem unnecessary; after all, your vendors and service providers surely have their own risk management programs in place. Those risk management policies, however, were designed around the goals and needs of those companies, and may not align with your own requirements. Moreover, an important part of your supplier relationships will be to create contingency plans in case your supply chain is interrupted.
Supply chain risk management can be handled with traditional methods such as spreadsheets, but many companies are increasingly turning to supply chain management software systems (SCM software) to aid in their supply chain planning. The supply chain management process is a complicated endeavor with many moving pieces, and having a centralized source of information can help keep your efforts organized and accessible.
Why Is Supply Chain Risk Management Important?
Your supply chain is the core of your business, and any business interruptions can be devastating to your day-to-day operations. One small error or delay can bring your entire company to a halt and cause lost profits and irreparable damage to your reputation.
As such, it’s critical that you apply the same care and attention to your supply chain that you do to your company’s internal operations. Transparency and visibility into all parts of your supply chain can help you anticipate future issues, seek replacements when necessary, and manage customer expectations accordingly. Having a well-managed supply chain is key to providing the best possible service for your customers.
Benefits of Supply Chain Risk Management
There are innumerable benefits to a supply chain risk management program, including:
One of the clearest benefits to a SCRM program is the increased security and safety for you and your customers. By monitoring your supply chain you’ll be able to catch vulnerabilities before they become threats, and react more quickly when problems occur.
Supply chain risk management can also be used to record and improve upon your past practices. Having a framework in place can help you examine what is and is not working which will in turn help you create a more effective risk management system over time.
A well-managed supply chain can be instrumental in creating a positive experience for your clients and customers. Regardless of your industry, fulfilling your obligations to your clients and keeping up with customer demand will be at the forefront of your list of goals. SCRM creates a smooth and consistent service that will keep your current customers happy as well as aid in the acquisition of new business.
The positive reputation you earn from having a secure supply chain can give you a firm advantage over your competitors. SCRM will streamline your business processes and help you provide reliable services. SCRM can also save you both time and money, allowing your cash flow to be reallocated towards your company’s future goals.
Improve Supply Chain Management with ZenGRC
Your supply chain risk management system is only a portion of your company’s overall risk management program. In order to effectively protect your organization from the risks you face, you need a system that will track risk throughout your supply chain and your entire company.
ZenGRC is a risk management software solution that provides your company with a single source of truth: every threat, control measure, and risk assignment in one place. With simple automation and an easy-to-use platform, ZenGRC can help track not only your own immediate risks, but also those of third-party vendors, in real-time, making it an ideal tool for supply chain risk management.
If your company is in search of an effective risk management solution, schedule a demo to learn more about how ZenGRC can help streamline your risk and compliance efforts.