Supply-Chain Risk Management: What You Need to Know

On the surface, supply-chain risk management has a simple goal: to identify and mitigate risks along the supply chain to ensure maximum security. With a closer look, however, the the elements at play get a little more complex. Where does the supply chain actually begin? What happens when a product has to be returned? Which regulatory and environmental factors must be considered?

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LPM Contributing Writer Maurizio Scrofani, CCSP, LPC, poses these questions and considers the complicated processes of the supply chain in a feature article for the October 2018 issue of LPM Online. From the article:

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Today’s vulnerabilities are multiplied due to greater geographic distances and the complex processes of the supply chain. Globalization presents unique challenges when applying supply chain risk management methodologies to safeguard the supply chain from emerging threats and vulnerabilities. Disruption can hit the supply chain at any point, from manipulation in raw
material usage, malware and intrusions in digital supply‑chain processes, cargo theft, and crime in warehouses and distribution centers.

At the very broadest level, external supply‑chain risks include:

• Demand risks caused by unpredictable or misunderstood customer demand.
• Supply risks caused by any interruptions to the flow of product, whether raw material or parts, within a company’s supply chain.
• Environmental risks from outside the supply chain, such as economic, social, governmental, and climate factors, including the threat of terrorism, global crisis and recession, and political upheaval.
• Business risks caused by factors such as a supplier’s financial or management stability, or purchase and sale of supplier companies.
• Physical plant risks caused by the condition of a supplier’s physical facility and regulatory compliance.

Scrofani goes on to ask the tough questions about the risk management process and shares tips on how to conduct a company-wide risk assessment. Check out the full article, “Into the Rabbit Hole of Supply-Chain Risk,” to go deeper into the tangled layers of supply-chain risk management.

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