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Driving supply chain risk strategy during coronavirus recovery

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In parts of the world, the coronavirus pandemic appears to be waning. Yet the global economy is now stuck in the mud. Will this standstill turn into quicksand for your company? As production ramps up again, procurement, purchasing and supply chain managers are no doubt weighed down with a heavy workload already — but you’ll also need to devote time to securing your supply chain in the future. Here is a five-point guide to drive your supply chain risk management strategy during the coronavirus recovery.

1. Get unstuck

Gaining a clear overview of your supply chain situation is critical. To start, ask yourself what you have learned so far. You may realize that you lack visibility, particularly on your sub-tier suppliers. Using data-driven analytics will help you uncover current and future threats faster and help you avoid supply disruption later. Here are four key steps:

  • Digitize your supply networks so you can easily visualize sub-tier levels.
  • Quickly identify risks related to the production and delivery of goods and to the viability of your supply chain.
  • Use relevant, real-time alerts to speed up your assessment of unfolding events.
  • Lean on risk management experts.

Available immediately, The riskmethods Coronavirus Supply Chain Visibility Kit uses artificial intelligence to send you alerts to related risk. Our team of experts can activate this kit within just 48 hours. This means you can quickly allocate resources to the highest-level threats and start mitigation efforts.

2. Get back on solid ground

Supply chains in virtually every industry have been disrupted by the COVID-19 pandemic. Purchasing and supply chain managers should scan supply networks to pinpoint precisely where flows have been disrupted. Three steps will put you back on solid ground:

  •  Identify: Understand what happened and identify the root causes. Quickly develop reaction options. Focus on the affected supply chain players (shippers, suppliers and more) and prioritize mitigation plans.
  • Assess: Figure out which parts are no longer available, what changes to lead times are and any effects on cost. Find out which products and revenue streams will be affected.
  • Mitigate: Initiate cross-functional mitigation efforts to minimize impact.

3. Shift gears from crisis to recovery

Going forward, businesses will need some heavy-duty traction over the coming months. According to riskmethods’ risk intelligence, 81% of industrial producers are experiencing supply problems along with a 38% increase in production delays as a result of the COVID-19 pandemic. In some global regions, shutdowns and lockdowns continue. Now, and during coronavirus recovery, riskmethods works with you to quickly identify production downtime within your supply base and quarantine affecting supplier locations, or your own locations. Other examples include:

  • Logistics and transport. Airfreight capacity is still severely limited. Be prepared for delays in outbound and inbound delivery through all logistic paths, including container ports, railways and inland trucking operations. Here, we provide alerts that monitor supply paths in real time, including port and airports, closing of borders and border-crossing times.
  • Inventory and storage. Disruptions will become more visible as remaining buffers within the tiers of the supply networks are depleted. Parts suppliers may not be able to open again at full capacity. Procurement and purchasing managers might struggle to secure alternative supply, or to identify alternative suppliers and bring them onboard. This means you need to either be proactive or be driven by the markets. Proactive risk management makes you better prepared than the competition
  • Sourcing and production. Manufacturers are beginning to reinstate employees, reschedule parts deliveries and restart production lines. They are under pressure to produce quickly, but the quality and speed of output can be affected. Reviving supply chains is filled with risk, because organizing the flow of goods is much more complicated than shutting networks down. By receiving early alerts, you learn where disruptions are and can come up with contingency plans quicker.
  • Finances and company viability. Almost everywhere, financial stability has also taken a hit. Riskmethods’ risk intelligence tracks force majeure and bankruptcy of your suppliers, as well as their future revenue outlook. More than half of coronavirus-related threats indicate financial distress and instability (56%). And we have identified a 44% rise in force majeure risk alerts, signaling a spike in risks relating to the company viability of suppliers and manufacturers.

4. Drive business continuity forward

The macro- and microeconomic effects of the COVID-19 pandemic highlight that proactive supply chain risk management is critical to keeping businesses up and running. In areas where restrictions gradually begin to ease, new threats are emerging.

In other words, if you haven’t done so already, you need to move from reacting to tracking and acting. This includes investing in ways to develop, implement and maintain a comprehensive risk-management strategy. As part of your business continuity plan, make sure that you review your key suppliers to ensure that they can continue to deliver. Aim to diversify your supplier base and use digital tools to visualize and track them through the sub-tier level.

5. Navigate risk with digital tools

This means that now is the time to digitize your supply chain processes. Why? For effective risk management of complex global supply chains, you must continually monitor millions of sources for new and emerging threats. This task is beyond human scale — but is possible when driven by artificial intelligence, combined with big data monitoring and machine learning. Once in place, digital tools will:

  • Lighten your workload through automated risk detection
  • Provide first-mover advantage with early crisis detection
  • Empower you to plan risk prevention and prepare for future incidents

These measures will greatly strengthen your business resilience as you move from crisis mode back to managing strategically. Don’t be stuck in the mud for long. Riskmethods offers enterprises with global supply chains the ability to identify, assess and mitigate risk within your supply chain — now and as we move together through the coronavirus recovery.

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