Determining the Avoidable and the Unavoidable in Supply Chain Risk

category management chagin/Adobe Stock

Some supply chain risks are avoidable. For instance, it is feasible and highly advisable to avoid doing business with potential suppliers in certain countries (like North Korea) where doing so would bring all sorts of risk to fruition. But any supplier could suffer from an accidental factory fire. A hurricane or flooding could strike pretty much anywhere in the world, so this sort of risk is unavoidable.

That does not mean, however, that we cannot take actions to manage that type of risk better. Those actions include both what can be done at the planning stage when we are considering the risk profile and how we respond if a risk event actually occurs.

That final point above is a fascinating element of this debate. Even when decent planning takes place, we see that organizations are often not as diligent when it comes to really thinking about how they will respond if the worst comes to the worst. There are some illuminating real-life stories that show the differences between firms that respond to these crises well and those who don’t. We’ve seen cases where buyers have not even been aware that a key supplier has a serious issue (a plant flooded, a major labor dispute) for weeks after the problem started.

To that end, Peter Smith, managing editor of Spend Matters UK/Europe, is involved in a webinar with risk management solution provider riskmethods, on Thursday, October 12, at 10 a.m. CDT, that explores this very topic: Unavoidable Supply Chain Risk: How to Prevent Avoidable Risk & Mitigate the Unavoidable.

Peter claims to have a great joke, which he will tell in the webinar to illustrate that serious point. But it highlights the fact that competitive advantage in practice comes from how you respond to risk issues, often in a crisis situation, as much as it comes from diligent planning and strategizing.

So, these topics are on the agenda for next week. Peter will be giving some views and proposing useful tips, and Heiko Schwarz, one of riskmethods’ co-founders, will add some real-life stories (positive and negative) around the topic. There will also be some time for questions from the attendees.

The webinar next Thursday will run for a sharp 30 minutes and you can register here. Even if you can’t make that time, if you register you will be able to access the recording and slides later on your own time.

Voices (2)

  1. BENSON AMUKPO:

    Yes. It is very important that every organisation involved in procurement activities have in place a mechanism for monitoring the risk associated with existing supply chains with the view to minimising or mitigating these risks altogether. Supply chain disruption comes with severe financial consequences. It is the task of procurement specialists to ensure the steady flow of raw materials, goods and services at the time they are needed. Ethics of procurement reveals risks associated with supply chains with routes in developing and third world countries which have become the manufacturing hubs of industries that were originally based in western democracies. Slave labours, bribery and corruptions, etc are some of the risks that should be mitigated.

  2. Gladys Misigo:

    It is always important as an organization to have a supply chain risk management plan in place to mitigate against risks that are inevitable.

Discuss this:

Your email address will not be published. Required fields are marked *