Overlooking the subtleties of your company's risk management data can become the most costly mistake in your portfolio. Beyond crisis-management numbers applied during severe problems, the information you're likely already gathering for risk management has undeniable power throughout operations.
It has the power to support efficiency, open new doors for supply chain possibilities and become a tool in developing vendor management best practices— provided it's leveraged correctly.
Everyday Efficiency, Improved
If you have the methodology in place to alert members of your supply chain team when an item or material is unavailable, setting additional alerts for less-than-optimum running stock levels is relatively easy. Automated framework— partially filled-in invoices that still need a human stamp of approval for oversight, for example— can then kick in to keep the wheels of progress humming along.
As business expert Dana Martin explains to Elementum, these same alerts can also signal chronic delivery time or fulfillment percentage issues from problem vendors, indicating where new providers should be considered. Having firm numbers and reports in hand is invaluable for assessments, and negotiation sessions when contracts arise for renewal, and together they also offer companies a chance to gracefully bow out of a dysfunctional vendor partnership or lay out firm expectations when beginning a new one.
"KIT" with KPI
Keeping in touch with your key performance indicators means adapting their calculation to match your current focus, no matter where it may shift.
If, for example, your ability to produce item A is disabled in the short term but you bump up production of item B to compensate, your real-time risk management data flow can be swapped and moved to reformulate your production-centric KPIs. As IT Firm Ikanow points out, static KPIs can be examined alongside this data stream as well, and used to help isolate which vendors are the worst offenders for troubling metrics.
Make it Actionable
In a recent survey of 1,000 executives by Accenture, only 17% of respondents reported putting their big data analytics— including risk management data— to use in their supply chain management, despite an overwhelming 97% agreeing that doing so was important. While having this data on hand as a research or consideration tool helps, using it as a "living" component to everyday vendor management best practices is the best way to use it effectively.
Informing a potential supply chain vendor that you've struggled with poor fulfillment rates communicates a past problem, but informing them that you can't sign on for less than a guaranteed percentage rate does the same while locking in progression towards future goals.
Expand the Reach of Data Points
Universal challenges like materials shortages, natural disasters impeding transport or new legislation are expected areas of focus in terms of risk management, but they aren't the only vulnerabilities on the playing field. Enterra Solutions' Stephen Deangelis' advises executives gathering risk management data to consider smaller, but no less important risks, such as dependence on a single supplier or the likelihood and potential impact of intellectual property theft.
These unusual points help build a truly comprehensive risk profile, rather than a one-size-fits-all type that could leave a company high, dry and data-less when an unexpected issue strikes their supply chain.
Risk management should be considered a versatile part of your supply chain operations— the flexible willow to your production's strong oak. By gathering a wide range of risk management data and using it to influence both current operational decisions, negotiations and vendor management best practices, you'll have your finger on the pulse of your business. This will put you in a truly enviable place for a business professional— unlikely to be caught flat-footed if a supply chain disruption occurs.