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Reducing Supply Chain Risk Through Better Data Management
The supply chain is the backbone of many industries. A disruption at any point in the logistics process can send a ripple effect throughout the business, leading to lost profits and even lost customers. Supply chain risk mitigation is essential, and an often-overlooked aspect of this process is data management.
Almost two-thirds of businesses don't use technology to monitor their logistics performance. This figure means that at least two-thirds of supply chains are likely not managing risk as effectively as they could. Using available technology to manage their data, companies can significantly reduce supply chain risks.
1. Identifying Current Risks
A company can't expect to handle their supply chain risks if they don't know where these risks lie. Without informative and well-managed data, identifying these hazards would prove to be challenging. Thorough data analysis reveals areas for improvement along the logistics chain.
Data analytics can highlight risks from factors companies wouldn't otherwise consider. Business intelligence solutions are often superior at making connections between different data points compared to human employees. Feeding data through these systems would give businesses a better picture of their current risks.
2. Prioritizing Risk
Not all hazards facing a supply chain are equally severe. Companies need to identify the riskiest items to mitigate them before moving on to lower-risk factors. Better data management would reveal which scenarios present the most relevant and concerning threats.
Some businesses may not have the ability to address every risk at once. Prioritization would allow them to see which items they should handle and which they can let go at the time. Advanced data analytics could pinpoint the most pressing risks and offer insights on how to mitigate them.
3. Tracking Products
The supply chain is fluid, so risk mitigation solutions for these companies need to be fluid too. Tracking data points throughout the logistic process would show how risks are changing. Businesses could then work to address modifying package priorities.
Sensitive products or those with limited lifespans are particularly prone to fluctuations in risk. Companies could employ technology like internet-enabled sensors to track package quality and outside factors throughout the shipping process. With these data points, businesses could monitor delicate products as they ship.
4. Predicting Future Risk
Prevention is better than cure. Thorough supply chain risk mitigation involves not just addressing hazards when they arise but avoiding potential risks. Anticipating future uncertainties can be challenging with traditional methods, but data management provides a solution.
By using predictive analytics software, supply chain companies can accurately predict a variety of possible risks. Factors like social risks such as political demonstrations and infrastructure changes like bridge closings would be difficult to predict without data analytics. But with predictive analytics, companies can foresee and adapt to them.
5. Assessing Partners
Supply chain companies have to consider the ethical standing of their partners. Any connection to suppliers or clients with unethical conduct could taint a business's public image. Appropriate data management can uncover these social risks so that supply chains can maintain a positive image.
Data analytics can reveal if products are ethically sourced or if companies' partners have had ethical issues in the past. Understanding these factors would allow businesses to better assess if a joint venture would be a business risk or not. Without gathering and analyzing relevant data, this process could be lengthy or inconclusive.
Data Management in Logistics
Many businesses today already incorporate advanced data management procedures into many of their processes. Applying the same technology and techniques to the supply chain is a natural progression.
Risk mitigation in logistics is essential to the survival of nearly any company. By improving their data management, businesses can improve their risk assessment and protection throughout the supply chain.