What is Supply Chain Risk Management?

Let's face it - business is steadily getting more  complex, as companies need to deal with increased  competition, shortened product life cycles and  growing number of variants that target small  consumer niches. To cope with this situation, firms  have deployed ever more complex and international  supply chains, trying to balance between cutting  costs and keeping the neccessary flexibility.

What does this mean? You are exposed to an  increasing lists of risks that have hitherto been  omitted - problems with ensuring steady supply,  wildly fluctuating prices and - on top of that issues of  sustainability, environmental impact and corporate  social responsibility. This puts a strain on traditional  Enterprise Risk Management - which concentrates  mainly on your company and its own processes and  which is not equipped with the right tools to deal with  external risks that come from hundreds of  organisations you interact with.

Reactive risk management is no management at all!

Think about the following: when a supply risk hits  your company, it's ALREADY TOO LATE! You  can merely react and hope to keep the damages as  low as possible. But that's merely the first step, since  it's not enough to monitor your direct suppliers, as  many practitioners suggest. When your direct  supplier is affected, you can still merely react to the  situation - although you may have some more time to  respond. The key in Supply Chain Risk Management  is to be able to identify key risks further upstream in  your supply chain (i.e. at your supplier's suppliers)  and work with these companies to reduce these  risks. This is where Meercat Risk Management  comes into play!

Studies have shown that the majority of companies -  both large and medium - do not lead an active risk  management policy in the supply chain, but merely  react to the situation of crisis. This reactive approach  to risk leads, at best, to decreased profits and, at  worst, threatens your company's survival.

This situation is compounded by a lack of knowledge  about risk management in the supply chain, and the  complexity of the processes themselves. Building an  effective risk management system from scratch  usually requires the hiring of consultants or months of  internal preparation.