Supply Chain Risk is defined as the “Conclusions and campaign that have consequences that could negatively affect information or goes within a supply chain”. There was a survey conducted by APICS at its members and customers to analyze the practice of supply chain risk.
The practitioner surveyed to explore the current trends in supply chain and operation management and the findings, based on this survey, were developed as research report by APICS Supply Chain Council (SCC). The supply chain risk practice fades once the perception of a risk disappears. Risk management optimizes the organization and supply chain response after a risk occurs and lectures the problem in advance.
Risk management is the continual activity of diagnosis, quantification and estimation of supply chain risks emerging from both within or outside the supply chain. Effective supply chain risk solutions depend upon cooperation with an organization’s business strategy and mission statement as well as supply chain partners.
Risk management covers the aspect of both the known and unknown risks. Examples of Known Supply chain Risks include
- Process Breakdowns
- Supplier Failure
- Poor Material
- Component Quality
- Inadequate Logistics
- Distribution Capability
The known risks are too numerous to list and besides the known risks can be identified before they occur and can be resolved using the risk mitigation efforts.
Managing risks in the newly developed environment are becoming progressively challenging because of uneasiness in supply and demand, universal outsourcing and short product life cycles. In order to eliminate a risk, supply chain risk manager must identify the root cause of the risk. With the instigation, developing an everlasting efficient solution becomes possible. Finding the root of the risk is a highly difficult task and high complexity, left out information and the lack of communication are the major challenges.
The scenario is to establish a history and projection of the future risks. Supply chain risk management must also address the unknown risks.
A risk management of an organization, as per the findings of the survey, performs better if they involve operations management professionals as risk management practitioners, as they have the advantage of direct access to supply chain information.