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How supply chain risk management software works

by Everstream Team | November 2, 2022

Supply chains involve many stakeholders, both internal and external. Internal departments involved in supply chain activities include finance, procurement, governance, risk and compliance, customer and supplier relationship management, and manufacturing. External partners might include a range of suppliers, distributors, carriers, logistics providers, sub-contractors, and customers.  

Each of these internal and external parties may use their own, disparate, IT solutions. This presents a significant hurdle for companies looking to optimize their supply chain operations, whether operationally (managing inbound, outbound, returns, etc.) or strategically (evaluating how changes to their operations might create benefit in terms of cost reductions, lower carbon emissions, or improvements in customer service). 

By deploying supply chain risk management software, companies can connect the dots and not only monitor their supply chain end-to-end, but also leverage prescriptive recommendations based on predicted risk at every step.  

How supply chain risk management software works 

The basis of supply chain risk management technology is a cloud-based software platform that combines multiple sources of data from different supply chain participants. That might include confirmed data from sub-tier suppliers; operational, performance, and cost data from external service providers such as transportation companies; and relevant information on weather conditions, political unrest, regulations, or other geographic supply chain risks. 

Importing and integrating these various data sources is automated, with regular updates ensuring that organizations always base their decisions on the most up-to-date information available. Update frequency depends upon the organization’s operational requirements and the availability of new source data. Delivery status information from a thirdparty logistics provider might be updated every few minutes, for example, while new information on marine vessel movements might only be available every few hours, and labor action updates every few days. The data used to model changes in the supply chain network or operations, on the other hand, might be handled more periodically. 

The software platform uses this rich and granular data in several different ways. It can provide detailed dashboards to supply chain management teams, allowing them to see the overall status of their networks at a glance, or to drill down into the details of specific locations, nodes, or routes. It can monitor supply chain operations and automatically trigger alerts for suppliers whose operations are at certain risk levels, or shipments at risk of delay. 

The ROI of supply chain software 

Beyond the obvious operational benefits offered by greater transparency, the real power of supply chain risk management software comes from the application of advanced analytics tools to derive new insights from the data. The combination of rich, timely data and advanced analytics capabilities translates into real value for companies in several ways:   

  • Identify your suppliers’ suppliers and pinpoint their actual manufacturing locations. With AI-powered predictions, you can anticipate high-risk events from weather patterns to material shortages to supplier viability and visualize multiple tiers of business and supplier relationships down to country of origin.   
  • Gain real-time data to know which products and revenue are at risk to make decisions faster. Monitor suppliers’ flow of materials and components to uncover multiple risk factors, better forecast performance, and assess the possible business impact. 
  • Get predictive insights from current events and historical data to show supplier, facility, and material risk.   
  • Uncover supplier signals indicating financial, sustainability, compliance, and reputational risk to make alternative decisions.  
  • Gain better functionality of procurement, logistics, and other supply chain systems by feeding risk data into your control tower, TMS, ERP, and SCRM, so your existing data is part of your workflow.  

Supply chain software cuts through complexity too, allowing management resources to focus on the parts of the network that face the greatest risks, or which offer the biggest improvement opportunities. It allows data-driven decision-making as companies seek to balance costs, risks, and environmental impact.  

Be proactive instead of reactive 

As supply chain networks become more complex and critical, companies need to move from a reactive to a proactive management approach. Supply chain risk management software provides the data and analytical capabilities necessary to optimize supply chain network design and logistics planning. By combining a company’s own data with external data sources encompassing supply chain risk, decisions can now be based on empirical data rather than “gut feel.” And because risk management software incorporates every Tier-n supplier, it paves the way for a more collaborative approach to supply chain management, in which participants work together to overcome challenges and deliver the highest possible level of performance.  

Get our special report on supply chain value, with a framework for calculating your own ROI 

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