3 Ways Supply Chain Risk Mitigation Efforts Can Go Awry

Published : July 1, 2015

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As a supply chain professional, it's very likely that the majority of your job is focused on making sure things around you go smoothly. While risk mitigation does factor into that, it takes a careful balance of involvement and simplicity to prevent it from overtaking your day-to-day operational focus. Is there such a thing as being too cautious in business? It may surprise you to learn that yes, there is—if mitigation is approached incorrectly, it can actually have a detrimental effect that exposes your company even further.

You may want to take a second look at your risk mitigation strategy if you find yourself adopting to any of the following attitudes.

"Just Keep Going"

The website goes down, a natural disaster strikes your shipment area(s), a power outage knocks your warehouse into the dark ages, but you'll find a way to keep going, because that's what good companies do, right? Not always. Staying the course and waiting things out is sometimes prudent, but as companies involved in the Los Angeles port shutdowns earlier this year found out, sometimes it's just a fast route to product becoming outdated or deteriorating while things sort themselves out.

Always be prepared to halt or slow down order flow, at least temporarily, to avoid inundating an already problematic situation. Gas stations have pump cut-offs and plumbing has release valves for these reasons—sometimes, in order to preserve the overall integrity of the system, it needs to be held back for a short troubleshooting period.

"We Don't Need a Risk Assessment"

You know your own warehouse. You understand the order volume, the layout of item storage, and where things could go wrong. You're there every day, after all. Don't let familiarity lull you into a false sense of security, however—enlisting the help of an unbiased outside source to draw up an impartial risk assessment is just smart planning. Supply chains have many different components, often spread across the world.

Getting a top-down view of the entire picture to self-assess risk is ambitious, but ultimately futile. Risk mitigation shouldn't be exclusively in-house; those involved in planning would be too close to the problem(s) to accurately portray and address them.

"That's Their Problem; They Can Solve It"

Ideally, problems at the material supplier and manufacturer levels would be addressed and solved before word ever reached your warehouse. But if you've been in the business longer than a few weeks, you already know that's very seldom the case. Even if a crisis is "not yours," you are often obliged to help handle it because it ultimately impacts your efficiency and fulfillment rates.

Get to know the processes involved in each of your suppliers' factories and warehouses so you aren't stepping in blind if you ever need to lend a hand. Hiperos' Eliot Madow encourages supply chain professionals to consider not only clear and present risks, but also risk relationships—the negative ripples in the pond that occur after the first troublesome stone. This approach guarantees a holistic and realistic view of the uphill battles you may face in the event of a supplier issue.

Remember, the sooner their problem is solved, the sooner your warehouse will be back in order.

Your risk mitigation strategy needs to be a team effort if you want it to thrive in the midst of a crisis, so don't overlook what allies and peers bring to the table. It may initially feel wrong to air your weaknesses, especially to others outside the company, but, in the end, it will contribute to your organization's strength and help you weather the inherent storms of the business cycle.

Preventing problems is a group goal that needs to be shared throughout the entire supply chain, and when everyone's on board, everyone benefits.

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Topics: Supply Chain Logistics

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