East West Manufacturing Blog

5 Tips to Reduce Supply Chain Risk

Written by Mary-Kerstin Hassiotis | April 16, 2015

Managing your supply chain can be a daunting task, especially if you are operating in the global arena. Follow these 5 tips to reduce supply chain risk and come closer to reaching success and growth on a major scale!

1. Know your (and your suppliers’) capabilities and limitations

Don’t get yourself into hot water by stretching your resources too thin or making promises you or your suppliers can’t keep. Be willing to take strategic risks, but keep in mind that there are potential consequences that could impact your business if something does go awry.

2. Focus on quality – not quantity

Be selective and strategic on all fronts – this applies to RFQs, suppliers, employees and more. Make quality a priority. Remember that reports and analyses are only as accurate as the data at the source. In terms of inventory planning, do your best to ensure that you are working off the most precise forecast possible. Accurate data + quality product = happy customers and business growth.

3. Analyze risk scenarios and always have a contingency plan

Heard of Murphy’s Law? Don’t worry, it’s not likely that everything will go wrong, but you should be prepared for unanticipated or unplanned scenarios, such as quality issues with your supplier, raw material shortages, natural disasters (recall the Japanese tsunami of 2011), etc. Have a crisis management strategy in place, and don’t put all your eggs in one basket. For example, if your supplier encounters an issue and is unable to perform, it is beneficial to have a secondary supplier in place to handle production in the interim. The same goes for logistics – have a backup carrier or forwarder ready to jump in, should plan A go out the window.

4. Standardize your processes and clarify expectations 

Create standard operating procedures (SOPs) for every process in your supply chain, from sourcing and quality testing to logistics and order management. Detailing your processes and defining your expectations from the start will ensure a smoother supply chain and reduce the risk of unfulfilled expectations for you, your customers and your suppliers. As your business grows and evolves, be sure to update your SOPs so they stay current. You can find some simple SOP templates here.

5. Maintain an open dialogue

Internally and with your suppliers! Every person in the supply chain must work toward a common goal and understand their role in the big picture. Strong communication will allow for quick resolution of any issues that arise and reinforce expectations. Remember – collaboration and teamwork foster growth.

Did you find this helpful? Check out this related post for more supply chain guidance: