Supply chain risk denotes an uncertainty or unpredictable occurrence affecting one or more of the parties within the supply chain, which can (negatively) impact the success of business objectives. As the supply chain becomes global, risk management and mitigation has to be part of the sourcing strategy.
In 1995, the Kobe earthquake (M=6.9), was one of the most devastating earthquakes ever to hit Japan; killing more than 5,500 and injuring over 26,000. As a result, supply chain disruptions were felt across a numerous industries. Many companies with suppliers in the Kobe region were forced to use alternate sources of supply or wait until Kobe was back on line. Who could have predicted that such an event would happen?
The goal of any supply chain risk management strategy should be to control, monitor and evaluate supply chain risk, which will serve to safeguard continuity and maximize profitability.
Effective supply chain risk management provides the ability to anticipate and respond rapidly to external trends and developments. It places a focus on uncertainties and the unexpected. Supplier relationships must be managed to ensure that supply chain partners are committed and support the risk management program.
I’m not completely sure you can eliminate every risk associated with sourcing, but you can take a proactive approach to ensure effective management of all potential risks throughout the supply chain.
If your company is about to undertake such an project or just want consultation, give Cetera North America a call or visit us at http://www.teamcetera.com/.
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