Getting Started with Supply Chain Risk Management

From weather events to geopolitical tensions and changes in regulations, supply chain risks are everywhere. The Business Continuity Institute found that almost 80% of the organization they survey had experienced a supply chain disruption in the previous twelve months. Most of these had suffered between one and ten disruptive events.  

Global supply chains have inherent risks. But this does not mean you should not take steps to mitigate risks and potential disruptions where possible.  

Disruption can pose a serious threat to operations – and profitability. A Gartner survey or chief procurement officers found that 42% of CPOs saw supply disruptions – caused by natural disasters or logistics failures – as one of their top four risks to procurement’s success. 

Some organizations focus on simply surviving the next crisis. But what if you could turn risk into a strategic advantage? What if, instead of just mitigating losses, you could unlock significant financial and operational value? 

This is the core premise of effective supply chain risk management (SCRM). It is a shift from a reactive, siloed approach to a proactive, holistic strategy that not only protects your business but also drives growth and resilience. 

The key is to move beyond a narrow, departmental focus. While a logistics team might use SCRM to reduce expedited freight costs, and a procurement team might focus on supplier risks, the real magic happens when these efforts are integrated.   

But the question remains: where should you begin? 

Step 1: Identify and Prioritize Your Biggest Pain Points 

The journey to SCRM excellence begins with a single, crucial step: understanding where your greatest vulnerabilities and opportunities lie. It’s easy to get lost in a sea of potential risks, so a structured prioritization process is essential. The goal is to identify the risk factors that will “quick wins” and immediate value. This helps you build the case for a broader SCRM initiative. 

Assemble a cross-functional team 

Don’t make this a top-down exercise. Your team members on the ground, whether they are in logistics, procurement, planning, or manufacturing, have the most intimate knowledge of the daily challenges and pain points. Bring them together to get a holistic view of your organization’s risk landscape. 

Survey your stakeholders 

Ask each team to identify and rank their most significant challenges.  

What keeps them up at night? Is it the unreliability of a key supplier of raw materials? The soaring costs of expedited freight? The lack of visibility into demand?  

Focus on impact 

Once you have a list of pain points, prioritize them based on their potential impact on the business. Which issues are causing the most significant financial losses, operational disruptions, or customer satisfaction problems? 

This initial step is not about solving every problem at once. It’s about building a consensus around the most critical priorities and creating a clear starting point for your SCRM journey. 

Step 2: Start with a Strategic Focus Area 

Once you have identified your priorities, the next step is to choose a strategic focus area. Use the “plan, source, make, deliver” framework is a helpful way to break down the supply chain and identify where you can make the most immediate impact. 

Choose your starting point 

Based on the prioritization exercise in Step 1, decide which “risk management center” to focus on first. If your biggest pain point is supplier unreliability, you might start with “source.” If it is transportation disruptions, you might focus on “deliver.”   

Leverage technology 

This is where modern SCRM platforms come into play. These tools can provide the near real-time data and AI predictive intelligence you need to manage risk effectively in your chosen focus area.   

By starting with a single focus area, you can demonstrate the value of SCRM in a tangible way, building the business case for a broader rollout.  

Figure 1: Conduct risk assessments across Plan, Source, Make and Deliver to identify and prioritize the most critical areas for risk mitigation

Step 3: Expand and Integrate Your SCRM Program 

After achieving a quick win in your initial focus area, the next step is to expand your SCRM program and begin to integrate it across the supply chain. The value of SCRM compounds as you connect the dots between different functions and create a single, shared source of truth. 

Build on your success 

Use the momentum from your initial success to make the case for expanding your SCRM program to other risk management centers. If you started with “source,” you might move on to “deliver,” to manage logistics risks.  

Create a virtuous circle 

As you expand your program, you will begin to see how insights from one area can benefit others. For example, using SCRM to avoid logistics disruptions can improve customer satisfaction as well as cash flow.  

Embrace a holistic view 

The ultimate goal is to achieve end-to-end supply chain management. This means breaking down silos and creating a cross-functional team that can manage risk holistically. While some risks are confined to specific departments, others can threaten the entire supply network. 

This long-term goal is achievable through a staged process that delivers value at each step of the way. 

Start Small, Think Big 

The journey to end-to-end SCRM is a marathon, not a sprint. An end-to-end approach creates a common language and a universal data source for evaluating risk. This helps your organization to align communications and enables a more agile and resilient response to disruptions.   

It is about breaking down silos and creating a virtuous circle where insights from one area of the business inform and strengthen the others. 

This creates a more resilient, agile, and profitable supply chain that unlocks significant value and creates a powerful competitive advantage.  

Your Partner in the Journey 

Embarking on an SCRM journey does not have to be a solo endeavor. A successful SCRM software implementation is not a one-size-fits-all solution. Instead, it is a collaborative effort to create a roadmap that aligns with your unique business goals.  

By working with a partner who can provide the technology, expertise, and support you need, you can accelerate your SCRM journey and maximize your return on investment. The key is to find a partner who will take the time to understand your business and work with you to create a tailored solution that meets your needs. 

Everstream Analytics can help you prioritize supply chain risks and realize value at every step of your SCRM journey. Contact us today.