Recently I was asked to give a presentation on supply chain risk reduction strategies. I focused on the way to pinpoint and assess potential risks, with the aim of driving action and addressing those risks.
I recreated the presentation here in this video:
Reducing risks in your supply chain
In summary, we’ll be looking at these points:
- Considering risks which have a low probability (like a pandemic, nuclear disaster, etc), rather than overlooking them
- Why a ‘Business Continuity Plan’ (BCP) is useful and how to create yours in order to avoid or reduce supply chain risks throughout your supply chain
- The need for supply chain transparency in order to for you to assess all suppliers and sub-suppliers so you can pinpoint risks
- A model to help you decide what the risks are, actions to take, stock to keep to cope with disruptions, etc (based on studies conducted by professor Simchi Levi)
- Graphing bottom-line impact VS total spend in order to see whether your highest-risk suppliers are also high-spend suppliers
- Using the data to create a list of key suppliers and categorizing them into geographical nodes so it is possible to drill down if a problem comes up in that area
- A list of actions you can take if you DO encounter supply chain problems, including:
– Where to keep inventory
– Close monitoring of certain facilities
– Double sourcing
– Developing a new supply chain in a different country
– Encouraging your key suppliers to also create a BCP in order to insulate you against supply chain disruption
– Buying insurance to cover against certain disasters
– Digitizing processes proactively before being forced to
– Diversifying sales channels to include more places to sell, instead of being reliant on one channel (for instance, selling via e-commerce instead of only in brick and mortar stores)
Creating a business continuity plan
I spoke at some length about the business continuity plan which helps put in place measures that can reduce your exposure to or lessen the impact of disasters (even those such as the COVID-19 pandemic).
👉 If you want to go through this process yourself, here’s a FREE business continuity plan template. 👈
Extra content about supply chain risk reduction strategies
- Read our supply chain risk management series of blog posts over on QualityInspection.org.
- This post: What Is A Process FMEA and When To Use It? [Template] can also help you to reduce risks in production processes, a valuable activity if risk-reduction is importan for you right now.
- Listen to our podcast episode ‘Supply Chain Risk Management & Reduction‘:
- You can also read through the slides for this presentation and save any you find helpful:
What supply chain risk reduction strategies have you followed to avoid or mitigate problems occurring in your supply chain which can negatively affect your business? For instance, did you have to take action recently due to the coronavirus pandemic? If so, what, and was it effective?
Let me know by leaving a comment, please.
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