According to a survey, 89% companies have experienced a supplier risk event in the past five years but, yet company awareness and plans to mitigate it lack maturity. A service organization may not know where to start and needs a practical approach. Increasing supply chain risk readiness can help to combat market disruption “A risk in supply chain is a threat that something might occur to disrupt normal activities and stop things happening as planned.”
Unforeseen supply-chain vulnerabilities and disruptions affect organizations, leading to financial downfall in industries, ranging from consumer goods and pharmaceuticals to electronics and automotive.
Service sector supply chains must work to continuously improve by managing the information, processes, capacity, service, performance, and funds from the earliest supplier to the ultimate customer.
Understanding the attributes of services in the supply chain context can provide information for enabling efficient and effective implementation of risk management. The main goal is to identify the potential sources of risk and implement appropriate actions to avoid or contain supply chain vulnerability.
The service sector supply chain risk management must deal with intangible, highly interdependent supply chain elements, which requires a spontaneous and proactive approach to risk identification, analysis, and control.
Service industries rely heavily on the information technology. Trade, transportation, utilities, professional and business services, education, health, leisure, and hospitality sectors require responsive supply chains to be efficient and effective.
Service sectors might experience transportation failure, so the use of redundant vehicles, modes and operators is necessary to lessen the risk. Also due to advancement in the transport industry, and their role in automation and supply chain, it is prone to cyber-attacks So the service industries need to work on employing different transportation modes and not rely on a single mode to effectively manage the risk.
The logistic providers are critical to keeping goods moving. Work with them to ensure that routes keep as free moving as possible. Maintain an open dialogue with providers and consider back up providers or contingency options in the event of delays on critical goods or products.
Relying on a single or a few suppliers increases the risk of supplier failure in an event of uncertainty or disruption. To mitigate this risk, source from multiple suppliers. Identify your ‘business critical’ suppliers score them on the impact their sudden failure have on your business, when critical suppliers are identified consider how quickly, easily and cheaply they could be replaced and whether back-up or dual suppliers could be put in place now to reduce the risk of failure. In case of cross border suppliers, carefully anticipate if an event will cause supply issues and if it is appropriate to stockpile any materials to avoid short term disruption.
A climate change may cause disruption in the supply chain. Resilience to climate change depends on its risk management approach, business plan and governance structure.
Unfortunately, most companies do not have access to the appropriate climate data to properly plan and reduce their physical climate risk. Supply chains are very vulnerable to natural disasters brought on by rapid climate change and bad weather. This risk can be mitigated by appropriate contingency planning which includes alternate sites for service infrastructure and insurance.
Service sectors must comply to a myriad of rules related to protection of citizens and natural resources. Markets are increasingly requiring compliance with extra-governmental sustainability policies. The lack of compliance with existing regulations can result in grave negative outcomes, from significant fines to orders to cease operations.
To mitigate such risk, a properly designed supply chain compliance program will enable a holistic method for service sectors to discover, prepare, analyze, and respond to existing and emerging supply chain compliance risks and requirements. Designing a scalable and flexible solution that leverages advanced analytics will enable organizations to adapt and proactively monitor ongoing compliance in today’s rapidly dynamic supply chain environment.
If the quality of the service gets affected, this can be a major threat for a service organization. Poor quality of the service will result in customers switching to alternative options. Careful supplier selection and supplier monitoring can mitigate this risk.
Customer is an integral part of supply chain. A service sector can mitigate the risk of losing customers by offering them continuous improvement and innovation in services.
