It’s easy to be negative when talking about supply chain failures. The reality is that these major failures happen but are also infrequent. When you use a partner like Accuserv you are protecting your business from these very unfortunate circumstances.
Supply chain failure can have serious economic and legal risks. However, what if a disruption was completely preventable and caused a life-threatening reputation risk?
Inventory managers are under constant pressure to have just-in-time inventory. However, compliance with regard to sourcing has put added time pressures on companies that they don’t simply have time for.
Here are 3 bizarre stories that could have easily been solved if they were working with a world-class distribution and supply company:
Major Supply Risks
Below are the most common supply risks:
1) data-security breaches – this is common among credit card processors and is a way indirect risk directly affects your business and your customers identity.
2) lapses in process discipline – a very common risks that is exposed when employees do not follow proper procedures.
3) loss of business knowledge – this happens when established procedures are not in-place and there is a high employee turnover ratio.
4) vendor failures to deliver – supplier risk due to transportation issues have a very real economic risk to your business
5) lack of compliance with government oversight and regulation – this is not only true in the countries you operate in but is also prevalent in the countries your suppliers operate in and the countries your customers operate in.
6) cultural differences – this risk is perhaps the most overlooked but one of the most important as certain business practices are common in other countries but illegal and offensive in others.
7) productivity fluctuations – there can be a variety of factors that lead to productivity fluctuations but one of the biggest is different countries holiday schedules and time-zone differences.
Framework for Identifying Supply Risk
Identify every supplier you work with.
Segment each supplier by geography and by product/service they provide.
Score each supplier on inherent risks both direct and indirect they provide.
Evaluate the effectiveness of the products and services they provide along with the associated risks the expose your company and customers to.
Develop a risk-mitigation plan with each associated risk and ask these suppliers how they plan to address the risks that you have identified.
Ensure the risk-mitigation plan is being followed through consistently throughout the business cycle and the calendar year.
Benefits of Outsourcing Supplier Risk
The natural inclination for most companies is to solve all of these problems in-house. However, there can be major benefits for outsourcing supplier risks to a distributor.
These benefits include:
- Give insight to manufacturers to create defensive and offensive strategies that turn risk into a competitive advantage.
- Help determine whether or not it is beneficial for a company to conduct a customer intervention and know in advance what the potential outcomes might be for an intervention.
- Improve competitive position in the market.
- Lower supplier costs.
- Position manufacturers to better address customer needs by addressing supplier vulnerabilities before they become apparent.
At Accuserv we are proactive about supplier risks. Here is what our customers have to say:
Outsourcing, lean manufacturing and just-in-time inventory can bring significant savings to an organization if their risks are properly managed. By implementing a risk-mitigation plan, companies also can uphold their commitment to provide a strong corporate governance process on behalf of the shareholders, which ultimately boosts their shareholder value. Organizations that do not are in a real sense working without a safety net and, in today’s high-risk climate, that is not a smart decision.
It’s important to point out that Accuserv does this for all our customers. Not only does this create less risk for our customers, but it also improves our relationship from being a simple transactional distributor to a trusted relationship-based stakeholder for our customers.
Please contact us at Accuserv if you are interested in how you can improve your supply chain to be more profitable and reliable.