Risks to consider in the supply chain

The management of the supply chain is a business process that cuts across the entire organization and affects both suppliers and customers and other actors in the chain, regardless of where they are located, therefore having common risks And that can affect everyone.

For this reason, collaboration between all the actors that participate in the chain is increasingly necessary to share risks and optimize the resistance of the supply chain.

There are always risks in all organizations. All companies have a list of potential events related to their risks, classified in terms of probability and impact or consequences for the business. However, few companies have contingency plans to successfully deal with supply chain disruptions.

In recent times, since the crisis generated by the COVID-19 pandemic and the lack of supplies due to higher-than-expected demand, we have paid more attention to controlling supply chain risks, mainly due to natural disasters, terrorism or the different political-economic crises. However, risks have always been an inseparable part of any business in general and supply chain management in particular.
This globalization of suppliers, production and customers makes up the so-called risk triangle. When this situation is mixed in the shaker with other risks such as the current lack of raw materials and components, political and economic uncertainty, strikes or problems in transport and natural or social disasters, as has been recently highlighted, they make supply chain risk increases.

We can ensure that the problem of risk is not simply in the failure of transport or in any other element of those mentioned above, which directly affect the management of the supply chain. The real risk is in the interruption of the business and its operations, which also involves the production of goods and services, computer systems and other areas with great possibilities of alteration. For this reason, redundancy is sometimes used to magnify risk, but the situation is more difficult when we work with complex environments and in supply chains that are geographically far from the points of consumption.
The resistant or resilient supply chain is a concept that arises in this century due to the increase in risk, market complexity and uncertainty, making chain management much more vulnerable to the different types of risks explained.

We define this resistance as the ability of any system to return to its original state or position or move to a new one more stable than the previous one.

As today’s supply chains are increasingly global, natural disasters, lack of raw materials and components, transportation problems, and armed conflicts such as the current one in Ukraine are increasingly playing a role in supply disruptions. supply chain activities and make business as usual not an option in such situations. That is why it is essential to improve the resilience or resistance of the supply chain to reduce risks.

To increase resistance in the supply chain, we must base ourselves on proven good management practices and on the basic principles of:

In order to identify and control chain risk, we must always work in collaborative environments with suppliers, customers and third parties.
Resilience means increasing agility and flexibility in the chain to react quickly to unforeseen events.
Chain strength is continually improved if we create and implement a culture for risk management throughout the organization.

At EsAsia, we are always up to date with everything that is emerging and we seek to integrate innovative solutions in order to provide the best service to our clients.