5 Key Principles for Managing Supplier Risk
In this post-pandemic economy, there is increased focus globally from governments regarding how businesses conduct and manage supply chains. Supplier risk is growing due to digital expansion, interconnectivity, and more widespread legislation around environmental and social issues. So, companies are having to adapt processes to support more resilient supply chains that rely on proactive supplier risk management.
Companies are turning to third-party risk management and automated supplier management as a digital solution to manage this ever-evolving risk landscape. Supplier risk and performance management solutions ensure companies have the governance, automated processes, and monitoring in place as part of an end-to-end risk management system.
Maximize revenue by managing supply chain risk and safeguarding compliance standards by being proactive with new legislation or global changes by doing the following:
Make informed decisions.
Evaluate real time risk to make responsive decisions that ensure positive outcomes based on risk appetite and supplier data. If your supply base consists of a larger number of suppliers, substantial risk factors need to be considered and tracked. Identify, understand, and prioritize risks to create a solid base for scalability that allows you to make faster and more intelligent decisions.
Build an end-to-end supply chain risk management framework.
A comprehensive cross-functional supply chain risk management framework is essential to mitigate risk throughout the entire organization. Every department from procurement to finance has to be fully prepared to deal with complex risks a global supply chain poses.
Continue monitoring risk.
Risks should continuously be monitored throughout the length of the relationship with each supplier, and supplier due diligence should never stop. A robust risk management framework should always have the agility to identify risk factors to plan and execute mitigation strategies in response to changing situations.
Create a risk-aware culture.
Although global inter-connectivity creates business opportunities, it also creates risks. Generating a risk-aware culture within your organization will enable individuals across your organization to make fully informed decisions when facing supplier risk. A risk-aware culture throughout the organization can not only help safeguard compliance standards, but the transparency from good communication can improve internal relationships and position all relevant department to be prepared to react quickly to any internal or external supply chain risks.
