5 Ways to reduce the risk of your supply chain
Supply chain risk is an inevitable part of running a business. From sourcing raw materials to distribution of finished products and services, it affects all parts of a company’s operations. How you successfully mitigate supply chain risk and avoid the potential costs of supply chain disruption is fundamental to sustainable growth and prosperity. It requires a collaborative and proactive approach that incorporates all stakeholders throughout the supply chain. Here we discuss five ways you can help to reduce your exposure to supply chain risk.
1. Undertake a business impact analysis
For your business to be able to withstand any potential supply chain disruptions, it has to be prepared. To be prepared, you need to understand and predict what effect any disruptions will have on your business and plan accordingly.
In order to understand your exposure to supply chain risk, you will need to undertake a methodical review of your business, its processes, people, suppliers, customers and market environment.
2. Assess and monitor new and existing suppliers
Assessing new suppliers and closely monitoring those already forming a key part of your supply chain is fundamental to both understanding your exposure to supply chain risk, and proactively mitigating that risk.
When partnering with new suppliers, be sure to assess them against the following factors:
- Capabilities measured against your needs
- Opinions/experience of their other customers
- Resources, including staff, equipment, storage, and materials
- Commitment to quality standards – e.g. ISO9001
- Management and control over policies, processes, procedures and supply chain
- Financial health – do they have a healthy cash flow?
- Cybersecurity processes and policies – particularly with regard to GDPR regulations if applicable
- Approach to communication and collaboration
3. Reduce concentration of supply
To help mitigate the risk of supply chain disruption, try to reduce your dependence on single supply lines. Obviously, if you’re dealing with a niche product, or have secured a significant bulk discount, then you have to weigh the benefits with the risks. However, relying too much upon a constant and uninterrupted supply from a single vendor, country or region can create a single point of failure.
Try to identify and build relationships with alternative primary and secondary suppliers. Understand which suppliers would represent the best alternative sources should a problem with your preferred suppliers occur.
Choose suppliers from different geographic regions. Seek out those who supply through secondary port locations. Although cost may be the main driver for supplier location, ensuring you have a diverse base of suppliers will help when a particular country or region experiences a disruption.
4. Work with your suppliers
Make sure all of your cnc machining parts suppliers are aware of your forecasts and customer demand cycles. When a fluctuation occurs they will be prepared and able to deal with it more easily. Be proactive instead of reactive. Incorporate agility into your cash flow management. With working capital available to smooth out demand, you’re less likely to experience disruptions in supply during spikes of increased demand. Pay your suppliers promptly. A supply chain with a healthy flow of working capital is far less likely to run into internal problems.
5. Proactively address supply chain cyber threats
With the continuing growth of big data and the sharing of information, supply chains are becoming just as much about the flow of information as they are about the flow of goods and services.
Risk mitigation is a built-in benefit of using Worthy Hardware to get CNC machined, CNC milling, or sheet metal fabrications parts. In addition to having the country’s largest, domestic, distributed and qualified supply base, we also insure every order for quality. Find out more about how we lessen your vulnerabilities and get you the parts you need at the same time here
Worthy Hardware is a CNC manufacturing and sheet metal fabrication company,including CNC machining services,CNC milling services, CNC turning services, laser cutting services and stamping services.Call us +86-76989919645 or email us [email protected] for more discounts for your projects.