Risk: Benefits of Risk Management
Supply chain risk management is more than a helpful addition to your operations. It will determine how effectively your organisation responds when there are unscheduled disruptions and things go wrong.
From natural disasters and transport accidents to unpaid bills and faulty components: these are risk events that can throw your organisation off course and affect your relationships with customers and end-users. Risk management helps your organisation to ensure the smooth and successful running of purchasing and supply operations. It contributes to the resilience of the supply chain and to business continuity.
Here are some of the main benefits of managing risk:
- Avoids or minimises the cost of risk events
- Speeds up your recovery, reducing downtime or avoiding it altogether
- Keeps supplies coming in to your organisation, so you can deliver to your own end users and patients
- In the private sector it protects your market share, denying opportunities for your competition to take orders from you
- Improves the quality of strategy, policy and decision-making
- Gives management the information they need to make decisions that weigh possible rewards against potential risks
- Improves co-ordination across the supply chain
- Gives stakeholders greater confidence in your organisation
It is important that your strategic suppliers have a risk management strategy so that if they do experience delivery or other operational problems they have plans in place to mitigate the risks. This will mean that your patients and other end users continue to receive what could be life saving products and services.
Risks vary from business to business but by considering the worst-case scenario for each situation, you can find solutions that will mean you are prepared when a risk event takes place. You can continue to run your operations smoothly, avoiding panic across the organisation.
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