Supply Chain Risk – How To Improve Visibility at Second Tier and Beyond

We have a new briefing paper (sponsored by riskmethods, but written independently) available to download now. It is titled Supply Chain Risk – Getting To Grips With n-Tier Visibility, and  you can get it here, free on registration.

It looks at risk in the supply chain, and in particular focuses on the challenges around managing risk beyond the first tier supply base.  Getting to grips with second tier or even further down the supply chain (hence the “n-tier” title) brings some real issues for most buyers. In today’s excerpt from the paper, we outline what can be done to get to grips with this challenge.

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Levers for Improving Second-Tier Visibility

So, buyers who want to improve their risk management process and include the second tier in the analysis in a structured manner must consider the levers and routes they can use to gain a better understanding. Whilst that is challenging, as we have said, there are a number of levers that can be used.

Perhaps the most obvious and important is using first-tier suppliers to gain access to, and information about and from, the second tier. In many cases, the direct suppliers will be very willing to discuss their supply base and help to identify key risks. There is an obvious benefit to them in understanding their own risk position, and if their client perceives there are risks in the supply chain, then that is by definition a direct business risk to the first-tier supplier. Suppliers will generally want to develop good relationships with their customers, so being helpful around the risk analysis and identifying second-tier providers makes sense.

Technology is also making a big difference now and enabling easier and better access to information about the wider supply chain. As discussed earlier, there is more data available now than ever, and tech firms like riskmethods and others can provide tools that help buyers  to make sense of all the data and turn it into actionable intelligence, including the picture for the second tier and beyond.

This can also become a “network effect”. All those n-tier suppliers are also first-tier providers to someone, and indeed are clients of other firms (or even the same firms in some cases). So information that is collected based on an organisation as a direct supplier will also be useful where it is a second-tier provider.

As platforms and systems improve and more and more data is collected, then firms will be able to access relevant information about any organisation involved in their wider supply chain or network. However, it is worth saying that issues of data security and confidentiality will have to be managed carefully here; each firm will want some control over their data, and this is unlikely to ever be a “data free-for-all”, for good reasons.

 

(To read more, download Supply Chain Risk – Getting To Grips With n-Tier Visibility, here, free on registration.

 

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