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Supply Risk – Managing for Confidence

There have been a number of recent issues that have increased attention to supply chain risk.  The volcano in Iceland, the riots in Greece, and the political unrest in Thailand all have had significant potential negative impact on supply chains.  The more typical issues of buildings burning down, labor strikes and weather all are cause for concern in maintaining a free flow of materials from your suppliers.  So, what are the vital things to do to help prepare for such situations?

First, identify your critical suppliers.  These may certainly be the ones where you spend most of your supply dollar, but they may also be suppliers that provide critical parts, parts that are hard to find, or parts where the supplier has some Intellectual Property interest.  Normally, this may be 10 to 25 suppliers.

Second, meet with the suppliers to explore what their risk management plan is.  Explore how they plan to maintain or restore your supply chain.

Third, review it periodically to be sure it stays updated.  Regular meetings should occur with key suppliers anyway, and part of the agenda should be review of the risk management program.

Managing supply risk is a critical yet often overlooked part of strong supply chain management.

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