10 Tips for De-Risking Your Supply Chain

10 Tips for De-Risking Your  Supply Chain

The supply chain can be impacted by everything from weather to infrastructure, so creating diversified, resilient networks has become essential. Here’s how to navigate uncertainties, enhance flexibility, and fortify supply networks against disruptions.

1. Diversify your assets and suppliers. The impact and disruptions from the pandemic taught us just how critical it is to develop a more resilient supply chain. The endeavor of maximizing resiliency goes hand in hand with minimizing exposure to risk. In most cases, lowering that exposure means not having all your eggs in one basket. Diversifying both physical and provider networks is becoming a necessity throughout the import supply chain. Look for single points of failure and determine if and how you can diversify.

2. Focus on adding value, not creating it. For many companies, the question isn’t what to do but what not to do. What is your team uniquely positioned to address and respond to effectively? And where can you find partners that are equipped to extend your impact without pushing the constraints you operate within at your company?

3. Consider capital vs. expense dollars. Many companies are being challenged to do more with the same or fewer resources than before. When evaluating new initiatives, consider the allocation of your capital resources and weigh the potential efficacy of an investment in both technology and personnel against the possibility of leveraging outsourced providers to augment your team’s capabilities.

4. Accelerate data aggregation. Data storage and aggregation is becoming less expensive with the burgeoning availability of cloud storage and its inherent ease of data transfer. Put together a strategy for your company’s data aggregation that prioritizes the seamless integration of providers and systems into a flexible environment that is not costly to change.

5. Keep resiliency efforts ongoing. Don’t forget that as you create a more resilient network, you then need to manage a more diverse network. Don’t overlook the recurring effort and personnel resources it takes to maintain and improve after implementing your strategy.

6. Put actionable metrics in place. As you diversify your network, you need to then establish meaningful metrics and a recurring cadence for reviews with your providers. Keep in mind that if your highest-scoring provider isn’t your best provider, your metrics are off.

7. Pay attention to provider solvency. As you begin to derisk and diversify your network, it will enable you to think about your provider mix differently. Maybe you can take a risk on a new provider in a market where you have more established providers in the portfolio. Derisking doesn’t mean not taking risks.

8. Determine the true cost. Look at the full cost of the opportunity. Opening up a new import warehouse may create an additional warehousing expense but transportation expenses, inventory carrying costs, or even an increase in sales due to speed to market can easily offset the initial expense.

9. Ensure provider flexibility. Core to de-risking the supply chain is to be careful to not enlist too many critical services from one provider. However, when selecting providers, additional opportunities should be identified—and potentially included in the contract—in the event you need those services.

10. Align your core solutions. When selecting a provider for one of your core solutions, make sure it is a core solution for the provider as well. Companies today are shifting strategy and focus, which can be impactful to you. Make sure you are aligned.

SOURCE: Reade Kidd, CEO & Co-Founder, EDRAY