How Do I Get Started – Supply Chain Risk Management 101

Image1. An organization’s  supply chain risk management program must be tailored to its overall objectives and should change when those objectives change.

2. Don’t risk more than  you can afford to lose.  But how do you figure out how much you can afford to lose? It’s all in your risk tolerance.  (Keep watching our blog!)

3. Don’t risk a lot for a little, i.e. understand the consequences before deciding which mitigations to act upon.  You cannot make decisions on mitigations simply based on the cost of the mitigation – it must be based upon the return on investment.

4. Consider the odds of  an occurrence.  How likely an event occurrence is directly correlated to how many resources should be assigned.

5. EVERY procurement should take the bidding supplier’s internal supply chain risk management program into account for an award – as well as how they work with their suppliers.  We’re going for transparency folks.  AND we need to measure performance against the program via active dialogue and supplier assessments.  This should be stated, up front, in the contract for simplest and least expensive explanation and enforcement.

Following the above five steps will get you asking the right internal questions for your organization.  And, when implemented, far along the path of your own supply chain risk program. 

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