Supply chain risks are an inevitable part of running a business. However, companies can handle situations to avoid heavy disruptions to their operations. Keep reading to learn about the five common supply chain risks and how to mitigate them.
Shortages of important materials can severely disrupt any supply chain. With a shortage, companies can’t fulfill orders or finish their products, resulting in major economic consequences. However, businesses can mitigate this supply chain risk by planning or anticipating shortages. Paying attention to market trends and talking to suppliers will help companies prepare for possible shortages. During preparation time, businesses can re-evaluate some of the supplies they order or use backup suppliers to obtain materials.
Earthquakes, floods, and fires heavily impact supply chains, causing postponed or paused deliveries. In addition, closed ports or damaged material can also contribute to the existing supply chain risk. Though it’s impossible to plan for all natural disasters, companies can create a contingency plan that helps them navigate this risk. For instance, re-evaluating high risk zones, building a network of diverse suppliers, or rerouting carrier routes can mitigate natural disaster risks.
Poor Quality Control
Poor quality control has a lasting effect on businesses, resulting in bad brand representation or loss in profits and customers. Companies must ensure they’re enlisting quality suppliers that will produce quality material. To ensure a great partnership (and excellent material), businesses can seek suppliers with an Avetta® certification. This accreditation mitigates risks by putting suppliers through a pre-qualification process that allows companies to select trustworthy suppliers.
At times, organizations can fall victim to cybersecurity attacks. Whether it’s mismanaging software data or lacking to protect digital information, cyberattacks can hurt a supply chain. To mitigate risks, businesses must limit access to digital information, and utilize trustworthy security methods. For example, cloud storage and private VPNs are some ways to mitigate risks.
Demand risks involve an inventory fluctuation that will give suppliers more business. However, it also comes with a risk. Of course, suppliers want an opportunity to make more money by selling more materials, but sometimes they can’t fulfill high demands. Companies must keep an eye out for suppliers who seem overwhelmed with orders and use their contingency plan to seek backup suppliers.
Though companies can’t avoid supply chain risks, they can mitigate the situation. Fortunately, this list of five common supply chain risks and how to mitigate them can help companies navigate future issues.
Here at Industrial Compliance and Safety, we prioritize safety across a wide range of industries. We help suppliers and contractors meet industry regulations and receive essential accreditations. If you have any questions, please call us today!