Mitigating risk in complex, multi-tier supply chains is undoubtedly a huge challenge facing businesses around the world.
Whether it be technical and compliance based, or environmental and social related risk, organisations are encountering increasing pressure from all regulatory, consumer and government angles, and are subsequently seeking increased visibility of all supply chain actors to ensure adequate risk management.
In this article, we will explore the difficulties many businesses experience when it comes to supply chain risk mitigation, and outline how supply chain software, such as Authenticate, can optimise risk management processes.
Room for risk mitigation improvement
Recent research revealed in CIPS Supply Management highlights the reality of current risk management processes for the majority of organisations.
- 57% believed their ability to assess supplier risk and compliance needed to be improved, while 6% had no ability to do this at all.
- Only 37% of large enterprises said they had an effective risk management system in place.
The risk mitigation reality – Reactive rather than proactive
With sourcing/procurement professionals spending 73% of their time on due diligence and recertification efforts, and only 27% focusing on ongoing risk monitoring, businesses clearly need more support to make the transition from manual, reactive ways of working to implementing automated technology, delivering actionable risk insight. Especially as risk reduction was the second biggest benefit cited by companies adopting cloud technology in the McKinsey IT Survey.
Mitigating risk with supply chain software
Supply chain risk can take many forms and has different consequences for businesses and consumers. Internal functions must be aware of risks most likely to impact performance, damage reputation or cause harm to people, animals and environments in their supply chain to mitigate them before they occur.
Common risks in complex supply chains comprise of:
- Environmental – including energy use, emissions, high risk commodities, waste, deforestation
- Social – including human rights, modern slavery, animal welfare
- Technical / Supplier – including certificate assurance, supplier onboarding, policies
Tackling the risks most pertinent to your company operations can be extremely challenging without full supply chain transparency. Built with different business functions in mind ranging from technical and procurement, to sustainability and ethics, supply chain software such as Authenticate in the first instance provides direct and indirect supplier visibility all the way back to source.
Once supply chain mapping has been completed, other digital solutions (where relevant for your organisation) provide the tools needed to securely gather, analyse and act on supplier data to proactively mitigate risk.
Our range of scalable modules cover:
- Digital Audits & Assessments – create custom assessment templates, set up scoring criteria based on compliance, risk or non-conformance, send to suppliers and review results in one place.
- Certification Assurance – automate supplier assurance checks against globally recognised schemes including Global GAP, Sedex, BRC, RSPO and much more so you can focus on the work that matters.
- Document Management – centrally share and request key policies concerning sustainability, modern slavery practices or anything else to flag where potential supply chain risk may exist and log supplier responses.
- KPI Management – manage and score supplier performance against key, custom metrics on anything from animal welfare, antibiotic use, pesticides and much more.
- ESG Risk Assessment – take our standardised assessment and share with suppliers to get an insight into the current maturity level and score of operations against critical environmental, social and governance matters to improve performance and highlight risk areas.
- Risk Dashboards – transform static supply chain data into actionable risk dashboards to inform decision-making. We can even integrate third party risk data with your own!
Ready to optimise your risk management processes through digital supply chain transformation? Get in touch with the Authenticate team.
