Supply Chain Risk Management: Current Industry Practices, Key Challenges and Requirements
By Evangelia Komitopoulou
In early 2015, SGS invited food industry experts to take part in a global survey—Supply chain risk management: How vulnerable is your supply chain? The survey—completed by respondents from 48 countries—explored current supply chain management practices. It also highlighted that independent of the approach to be followed, gathering, processing, handling and communicating the right information is a prerequisite to effective supply chain risk management and a bolster to supply chain resilience.
The survey confirmed that although organizations do have systems and processes in place to manage their supply chain network, these are not always perceived to be very effective. They fail to address supply chain risks or ensure transparency and visibility across the supply chain. Lack of chain visibility and transparency is the primary challenge to effective supply chain management. Overcoming this challenge requires the industry’s ability to:
- Identify and implement sophisticated information technology tools able to identify, collect, analyze and report data in real-time
- Better appreciate supply chain risks, incorporating them into supply chain management strategies
- Ensure visibility and information/knowledge transparency across the supply chain
Effective supply chain risk management strategies require setting up and implementing the appropriate processes as well as employing the technology to sense and respond to events as they happen. It requires introducing risk and visibility at the center of an organization’s supply chain strategy in order to achieve an agile risk response. Providing supply chain visibility is a significant challenge as achieving the required degree of visibility is—in itself—a complex task. It requires building strategic relationships with partners and stakeholders across the supply chain, sharing important business and operational information in a timely manner. The SGS industry survey confirmed that effective communication and collaboration across the supply chain, end-to-end supply chain visibility, and transparency—as well as knowledge of current and emerging risks—are considered to be the top three prerequisites to effective supply chain risk management and must-have requirements for the development of a resilience framework.
In order to achieve effective supply chain management, organizations need to take a holistic integrated approach to managing their supply network. Such an approach requires establishing clear supply chain risk ownership, accountability and management as well as investing in developing and implementing the appropriate processes and tools as key risk management enablers not only to identify and monitor current risks, but also to predict future ones. The SGS Supply Chain Solution powered by T Transparency is built upon a social network platform that enables the entire supply chain to communicate more effectively in real-time to quickly verify data and assess risks. Organizations can prompt partners to join their network to easily share information and documentation, driving multi-layer visibility that reduces costs and increases product safety. This simplified and cloud-based workflow achieves a number of goals:
- Ensures the accuracy of data and information
- Helps partners communicate about and react to recalls and industry alerts
- Enhances productivity
- Provides brand owners with a dashboard of invaluable insights, such as overall supply chain risk, visibility and compliance.
The commitment to produce safe products is a shared responsibility and as such, it needs to be extended to include the whole supply chain. Such commitment needs to be clearly demonstrated through setting up specific roles, responsibilities and expectations at all levels of the chain. The SGS industry survey has confirmed that effective communication and collaboration across the supply chain, end-to-end supply chain visibility, traceability and transparency as well as knowledge of current and emerging risks are commonly considered to be the main three prerequisites to effective supply chain risk management and must-have requirements for the development of a resilience framework.
Evangelia Komitopoulou is an expert food microbiologist and serves as the global technical manager for food at SGS.