6 Step guide to minimize supply chain risks
Logistics and supply chain industry is one such sector which carries maximum risk factor that cannot be ignored and is inevitable. It is possible that the risks can come in any form let it be via a natural disaster, societal, economic or political uncertainties or even can occur when a company closes down.
Risks are something which cannot be completely predicted and cannot be accurately planned for. Having said that this is something which needs to be dealt with apt use of technology with the help of data collected and using predictive analysis and also implementing certain proven strategies.
A well-driven optimum supply chain operation is the backbone of a successful business. Hence it is imperative to say that one has to take into account all the various risks and adversaries that can occur at any phase of the supply chain operations.
We would like to enlighten on 6 step guide that every supply chain logistics provider can implement in order to foresee the risks and manage to counter it.
Need to identify and assess the risks:
This is possibly the most obvious of all but one has to first and foremostly identify the risk involved. One needs to have a closer look at the various aspects of the business and also understand all the high-risk exposures involved. Many a time we are deceived by the obvious and overlook the ones that can be minuscule but pose a threat to the smooth functioning of the supply chain process. Let’s take an example where if your business is engaging suppliers all across the globe then the biggest risk that can disrupt your operations will be the possible increase in tariffs and labor costs. One has to think strategically how to handle and tackle this risk as it can happen without any unprecedented announcement and can easily disrupt your operations.
Quality is of utmost importance:
In a supply chain industry, the two most important entities are the retailers and the suppliers. These two contribute highly to the quality and reputation of your company. Hence it is of primary importance to monitor the quality of the goods provided as this will help to reduce returns and refunds that can, in the long run, have an adverse effect on the business.
Another key factor that can also be considered a risk to the smooth conduct in retaining quality staff and this also contributes to the quality deliverances of the company. Having quality staff shows up on the quality service rendered and thereby reduce the risk of losing business.
Improve connectivity & visibility:
Once you are aware of the potential pitfalls that could hamper the smooth conduct of the supply chain it is important to evaluate various other factors that can contribute to reducing the risks. This can be anything from employing the right personnel to many productive tools and technologies. Transportation is all about reaching the goods on time to the customers and any kind of adversaries can be a roadblock to the same especially because it invariably has to cross international waters and boundaries. In such a scenario it is important to be able to keep track of the route and have better connectivities that can provide better visibility of the movement of your shipment. By better visibility, one can be aware of the exact route via which the transportation is moving and with better data analytics can access any risks involved in those routes.
Use advanced analytics for better forecasting:
It is always better to access any situation based on the data that has been collected in the past and thereby create better forecasting and predictions. Today machine learning and advanced data analytics make it possible for a business to create all possible strategic implementations to reduce risks by decreasing certain frequent unexpected occurrences. Data that has been collected can also enable the machine to machine communication that enables systems to automatically trigger actions to make corrective adjustments in the supply chain process with minimal human intervention thereby reducing the risk of errors.
Get good insurance coverage to minimize risks:
There is no such industry as logistics that can cause huge damage and losses due to the risks involved pertaining to the value of the goods in transit. Hence it is always better to go by the rule of thumb to take good and complete insurance coverage. Find out a reliable and experienced cargo insurance provider who is well aware of the various risks involved in the trade. The insurance has to cover all the various accidents and mishaps as well as any losses that can occur due to natural disasters while the cargo or goods are in transit. Take insurance coverage not only on the goods in movements but also of the warehouse if you have one and this will help you cope up against all small as well as large scale damages.
Always have a Plan B handy:
Having discussed the various important steps that can be taken to minimize the risks involved in the supply chain the last of them all is to always have a Plan B in place. It is most certainly important to not take things for granted and think of a possible scenario where certain primary operational plans fail. If you can create a Plan B that will help in ensuring the flow and movement of the supply chain operations then you stand very little loose.
With the growing E-Commerce industry showing manifold revenue and customer demands still being on the rise every single day one has to be aware and access all the possible risks that can hinder the operations. Proper assessment, evaluation and installing the right technology tools with good predictive analytics can reduce a major part of the risks thereby reducing damages and loses.