Business Strategy

Supply Risk Management and Supply Chain Visibility

December 18, 2014 | Xeeva Team

Setting up systems to monitor supply risk management and supply chain visibility can preempt future performance issues that your organization may encounter.

Predictive financial performance monitoring tools are often of value to companies monitoring the activities of their suppliers – indeed, recently one large global manufacturer was able to prepare for the impending bankruptcy of a major supplier due to their predictive analysis, indicating that the supplier was developing cash flow issues.

Related: Supply risk strategy

However, there are other, less complicated means of monitoring the performance of suppliers that proactive companies can use to determine whether a supply risk exists. Some suppliers refuse to advertise in trade publications or on other media because of their political views. This risks alienating the supplier from companies that believe that political views should not be brought into business and also limits their exposure to potential customers.

Political considerations can also influence supply chain visibility. For example, in Venezuela, Hugo Chavez nationalized a number of plants to thwart a national strike protesting against his policies.

Scenarios like these occurring, again and again, are a distinct possibility across the globe, where increasing political instability could force many regimes to redirect national resources (including, in Venezuela, private businesses) to manufacturing when the economic damage caused by such an action is outweighed by the threat of conflict.

Global companies are at the greatest risk of supply chain issues when they do not develop a strong supplier screening process. Poor supply chain visibility (e.g. what is the supplier’s supplier doing?) can be avoided by establishing an ongoing dialogue with suppliers beyond production issues.

Poor supply chain visibility can be avoided by establishing an ongoing dialogue.

Organizations that fail to understand the overall regional, economic, and political conditions of their suppliers are also at risk of supply interruption, bad press, and lost market share when social and geopolitical issues grab the headlines and threaten the supply chain.

The business consequences of failing to set up systems to monitor supply risk management and supply chain visibility can be costly and expensive to remedy.