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Supply chain risk management
Supply chain risk management (also abbreviated as SCRM) is "the implementation of strategies to manage both everyday and exceptional risks along the supply chain based on continuous risk assessment with the objective of reducing vulnerability and ensuring continuity".
SCRM applies risk management process tools after consultation with risk management services, either in collaboration with supply chain partners or independently, to deal with risks and uncertainties caused by, or affecting, logistics-related activities, product availability (goods and services) or resources in the supply chain.
SCRM attempts to reduce supply chain vulnerability via a coordinated, holistic approach ideally involving all supply chain stakeholders, collectively identifying, analysing and addressing potential failure points or modes within or affecting the supply chain. Risks to the supply chain range from unpredictable natural events (such as tsunamis and pandemics) to counterfeit products, and reach across quality, security, to resiliency and product integrity.
Mitigation of supply chain risks can involve logistics, cybersecurity, finance and risk management disciplines, the ultimate goal being to maintain supply chain continuity in the event of scenarios or incidents which otherwise would have interrupted normal business and hence profitability. The cost-effectiveness of resilience and other measures is an important factor since, as long as things are running smoothly, they add to the costs of production. To reduce interruptions to supply chain management in terms of logistic there are logistics risk management programs which includes Defensive Driver Trainings, Fleet Audits, Cargo Loss Minimization, Road Safety, Warehouse Safety etc.
Some supply chain logistics techniques such as supply-chain optimization and lean manufacturing can prejudice continuity and resilience. It is also becoming more common among businesses especially manufacturers to extend supplier quality management practices throughout supply chains. This approach is shown to increase transparency, reduce overhead costs, and improve operational efficiency.
A survey in 2011 conducted by the Business Continuity Institute (BCI) and Zurich, with responses from over 559 companies across 65 countries, found that over 85% of companies had suffered at least one supply chain disruption during the year. Later BCI surveys have reported some reduction in this percentage (70% in 2016, down from 74% the previous year).
The 2011 survey respondents also noted that 40% of the reported disruptions originated upstream with sub-contractors rather than prime contractors or first-tier suppliers.
A 2016 survey also noted that one in three organizations had experienced cumulative losses of over €1 million per year because of supply chain disruptions, and 22% of businesses had experienced 11 or more disruptions.
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Supply chain risk management
Supply chain risk management (also abbreviated as SCRM) is "the implementation of strategies to manage both everyday and exceptional risks along the supply chain based on continuous risk assessment with the objective of reducing vulnerability and ensuring continuity".
SCRM applies risk management process tools after consultation with risk management services, either in collaboration with supply chain partners or independently, to deal with risks and uncertainties caused by, or affecting, logistics-related activities, product availability (goods and services) or resources in the supply chain.
SCRM attempts to reduce supply chain vulnerability via a coordinated, holistic approach ideally involving all supply chain stakeholders, collectively identifying, analysing and addressing potential failure points or modes within or affecting the supply chain. Risks to the supply chain range from unpredictable natural events (such as tsunamis and pandemics) to counterfeit products, and reach across quality, security, to resiliency and product integrity.
Mitigation of supply chain risks can involve logistics, cybersecurity, finance and risk management disciplines, the ultimate goal being to maintain supply chain continuity in the event of scenarios or incidents which otherwise would have interrupted normal business and hence profitability. The cost-effectiveness of resilience and other measures is an important factor since, as long as things are running smoothly, they add to the costs of production. To reduce interruptions to supply chain management in terms of logistic there are logistics risk management programs which includes Defensive Driver Trainings, Fleet Audits, Cargo Loss Minimization, Road Safety, Warehouse Safety etc.
Some supply chain logistics techniques such as supply-chain optimization and lean manufacturing can prejudice continuity and resilience. It is also becoming more common among businesses especially manufacturers to extend supplier quality management practices throughout supply chains. This approach is shown to increase transparency, reduce overhead costs, and improve operational efficiency.
A survey in 2011 conducted by the Business Continuity Institute (BCI) and Zurich, with responses from over 559 companies across 65 countries, found that over 85% of companies had suffered at least one supply chain disruption during the year. Later BCI surveys have reported some reduction in this percentage (70% in 2016, down from 74% the previous year).
The 2011 survey respondents also noted that 40% of the reported disruptions originated upstream with sub-contractors rather than prime contractors or first-tier suppliers.
A 2016 survey also noted that one in three organizations had experienced cumulative losses of over €1 million per year because of supply chain disruptions, and 22% of businesses had experienced 11 or more disruptions.