Your supply chain can determine the success of your entire business. The time and energy you put into creating products and services for consumers would all be in vain without suppliers, carriers, and logistics partners. Unfortunately, your dependence on a supply chain could also be your downfall. A disruption in the supply chain can affect the bottom line and cause devastating consequences for you and your customers.
Thankfully, there are practical solutions to mitigate supply chain risks. It all starts with an awareness of the risks your company faces and a commitment to fighting against them.
Supply chain management isn’t just helpful — it’s essential. By proactively identifying internal and external risks, your business can protect itself from potential disruptions and ensure an uninterrupted flow of goods to consumers.
Understanding Supply Chain Risks
Multiple parties must be involved to get your products to your consumers. But the more complex your supply chain, the more potential for operational disturbances. From price increases to strained supplier relationships, countless factors — internal and external — determine a supply chain’s success.
Internal risks come from within your supply chain, which gives you a certain degree of control over them.
- Manufacturing Risks
Disturbances to internal operations or processes
- Business Risks
Changes in employees, management, reporting structures, or business processes
- Planning and Control Risks
Insufficient evaluation and planning that result in poor management
- Mitigation Risks
A failure to plan for emergency situations and find alternative solutions
- Manufacturing Risks
External risks are those that occur outside of your supply chain. Since you have less control over them, advance planning becomes even more crucial.
- Demand Risks
Unforeseen or misinterpreted consumer demand
- Supply Risks
Disruptions in the flow of goods within a supply chain
- Environmental Risks
Economic, social, government, and climate issues that disrupt supply chains
- Business Risks
Supplier stability and the purchase and sale of supplier firms
- Demand Risks
Ensuring the seamless flow of goods from manufacturers to consumers involves a complex system of interdependent processes and relationships. And the greater the complexity, the higher the supply chain’s vulnerability.
It’s important to recognize that your industry faces distinct risks, and the timing of these risks can vary. Taking a proactive approach to identifying and mitigating internal and external risks will enhance your company’s resilience and help you maintain a competitive advantage.
Supply Chain Risk Management Best Practices
Mitigating supply chain risks takes hard work and dedication, but it’s worth it. Your business — and customers — will thrive when your supply chain runs smoothly and is prepared to weather any challenges. With a comprehensive supply chain risk management (SCRM) plan in place, you’ll be more aware of the risks you face and more confident in your ability to handle them.
1) Work with multiple suppliers.
Finding multiple suppliers will allow you to meet demand as it changes. Suppliers that work out of multiple locations are more reliable as they aren’t subject to a single point of failure.
2) Establish nearshore partnerships.
Partnering with suppliers and distributors that are close to your center of operations reduces the possibility of delay. So, not only will you be able to maintain enough supply to meet demand, but you’ll get products to expectant customers on time.
3) Create inventory buffers.
Just-in-case inventory strategies call for excess stock to prepare for fluctuations in demand. While this approach requires more storage and warehouse space, it can help mitigate demand risks.
4) Improve vendor visibility.
Prioritizing vendor transparency allows you to identify potential problems before they occur. Product and shipment visibility will keep you and your customers current on expected delivery times, building trust and strengthening customer relationships.
5) Model worst-case scenarios.
As you gather logistic information over time, you can use it to simulate high-risk situations using data, predictive analytics, and data modeling. Visualizing potential problems allows your business to more accurately develop contingency plans for how to proceed in the event of a disaster.
6) Perform regular risk assessments.
As you identify risks, use hardships from the past to inform your business’s future. The risks you’ve already encountered can predict the ones you’ll experience in the future. In turn, this allows you to prepare more effectively. And it’s important to remember that identifying risks doesn’t just happen once — it’s an ongoing process. Constantly evaluating possible threats to your supply chain will help you determine how to actively combat them.
The UCW Difference
Finding a logistics partner to help you streamline your supply chain can feel like just one more thing on your to-do list. We’re here to make sure that’s not the case. UCW Logistics is proud to be a trusted logistics partner that can help your supply chain run smoothly and free you to focus on your business.
Your customer relationships are important, and supply chain risks shouldn’t jeopardize them. That’s why we’re committed to delivering customized logistics solutions for every situation and time constraint. With UCW, you never have to compromise reliability or worry about your freight being slowed down. We use industry-leading technology, data platforms, and software integrations to ensure your success, all while providing top-notch customer service.
Plus, our network of trusted carriers acts as an extension of our company. We take the time to match you with carriers that have the equipment you need to get your freight to its destination. A healthy relationship between you and your carriers plays a critical role in the success of your supply chain, and we don’t take that lightly.
Your freight matters. Your customers matter. And your business matters. We’re here to ensure that the things that matter get the attention they deserve. We work to help your supply chain run the way it should. Because a successful supply chain helps fuel a successful business. And your success is our success, too.