Risk Management and Supply Stability – How Can You Improve Logistics in Your Company?
Pandemic, war, financial and energy crises – all these factors can lead to supply chain disruptions. However, with the right procedures in place, companies can effectively respond to crisis and unforeseen situations. Surprisingly, as many as 47% of Polish small and medium-sized enterprises struggle with the negative effects of supply chain breakdowns. How can this be prevented?
The 2022 “SME Scanner” study* found that as many as 47% of small and medium-sized enterprises struggle with the negative effects of disrupted supply chains due to the war in Ukraine. Nearly one in three entrepreneurs pointed to issues such as reduced sales and the need to find new suppliers and substitutes. Another study is equally pessimistic—according to a survey conducted by SUUS Advisory**, 67% of entrepreneurs stated that supply chain disruptions caused by the pandemic had an impact on their business operations. For the remaining 33%, it turns out that while they also face logistics chain challenges, they are well-prepared to handle them. This highlights the importance of implementing a proper action plan that includes identifying and managing supply chain risks.
What Are the Risks to the Supply Chain?
First and foremost, it should be noted that external factors are responsible for supply chain disruptions. The ongoing COVID-19 pandemic and the war in Ukraine have caused logistical problems worldwide, blocking the delivery of goods. The ongoing financial and energy crisis further exacerbates the situation. As a result, companies are experiencing declines and losing business partners and customers, forcing them to seek new solutions and partnerships. However, these are unusual and even extreme situations that most businesses were unprepared for.
Threats that companies must face, especially when supply chains are complex and dispersed:
biological: epidemics and pandemics
technological: equipment failure, data center outage, data leak, cyberattack
political: changes in legislation, government decisions
natural: natural disasters such as floods and wildfires
Let’s return to the “SME Scanner” study. According to its findings, the war in Ukraine disrupted global supply chains, leading to a deterioration in companies’ financial situations. The transport, industrial, and trade sectors suffered the most. However, this does not mean that other industries can rest easy—quite the opposite. The crisis is forcing businesses to shorten and deglobalize their supply chains, even at the cost of increased expenses. The current market situation highlights that effective supply risk management is essential for every company, especially those with long supply chains and partnerships outside the local market.
Why Do You Need Risk Management in the Supply Chain?
Although supply chain disruptions usually occur unexpectedly, it is possible to prepare and protect an organization’s resources. The solution is an action plan that may not prevent crisis situations but will help mitigate their negative effects.
Supply chain risk management allows you to:
- Identify and control risks
- Significantly reduce the impact of risks
- Minimize additional costs resulting from delays or cargo losses
- Maintain a competitive advantage
- Preserve and enhance a positive reputation among customers
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The obvious benefits of risk management and supply quality are cost reduction. However, constructing a good action plan and responding appropriately to threats also help maintain reputation and even strengthen the position of a leader. Only a well-constructed risk management plan allows making key business decisions, even the more proactive and risky ones.
Why is this important? The events of recent years, such as the pandemic and the war in Ukraine, show that alongside a trusted network of partners and diversification in terms of products and geography, the stability of supply chains is crucial.
How Can You Ensure Supply Chain Stability?
The best way to efficiently and flexibly manage the supply chain is to use an available IT tool. This allows for a detailed analysis of individual supply chain links and the identification of potential risks. One such risk management tool is eRisk, which comprehensively handles and automates processes related to this area.
The eRisk system is designed to align as closely as possible with the specifics and operations of a company. Importantly, it meets the requirements of ISO 31000 and 28001 standards, effectively helping to reduce risks and losses. A significant advantage is its ability to integrate with other solutions, such as KPI, allowing you to enhance the efficiency of managed processes.
Find out how we operate and support companies: Supply Chain Risk Management
*The study was conducted by the Keralla Research Institute on behalf of the BIG InfoMonitor Debtors Register in July 2022. The survey included 500 micro, small, and medium-sized enterprises.
** The survey was conducted by the SUUS Advisory supply chain consulting team among logistics managers of large and medium-sized enterprises.