Supply Chain Risk Management (SCRM)

Hello Everyone,

This is Vembu Raj T, pursuing my MBA second year in Amrita School of Business, Coimbatore. Today’s my blog is on topic “Supply chain risk management (SCRM)”. Supply chain risk management (SCRM) is the process of taking strategic steps to identify, assess and mitigate the risk in your end-to-end supply chain.  

Supply chain risks include cost instability, supply shortages, financial difficulties and failures of manufacturers, and natural and manmade disasters. SCRM techniques and technologies allow an enterprise as efficiently and effectively as possible to anticipate future challenges and respond to both such threats and unforeseeable supply chain disruptions.

A comprehensive approach to SCRM includes the management of all forms of risk, for all levels of supply and for all project risks (suppliers, locations, ports and much more). When implemented right, SCRM is a vital enabler that is incorporated and integrated into the core processes of an organization.

Below are the suggested best practices for supply chain risk management:

1. To gather, evaluate and manage supplier information, automate processes involved in supplier risk management (SRM).
2. For insight into future financial challenges, include supplier performance information in your study.
3. Identify red flags that can signify problems and automate their early detection using technology.
4. Integrate SCRM platforms with information systems for procurement and supply chain management (SCM), including spending visibility information, e-sourcing, purchase-to-pay, contract management and enforcement.
5. Provide dashboards that can track and report on risk indicators of supply to provide the executive team access to risk factors in real-time observations.

Importance for Supply Chain Risk Management (SCRM) is continuously increasing over the time because of,

1. Just in Production/Just in sequence - Running a lean supply chain means you have less wiggle room when things go wrong.
2. Globalization - Outsourcing and supply chain length and complexity are growing. This leaves you open to more risk.
3. Brand Reputation - It is important to tackle problems that could damage the brand reputation with more regulation and the rising impact of social media.