Mitigating supply chain risk is a leading concern among global business leaders today and one that needs to be addressed on a larger scale. While 76 percent of business leaders consider operations risk management as important or very important to addressing supply chain risk issues, only 37 percent of non-leading companies make risk management a strategic imperative according to Accenture’s recent Global Operations Megatrends study.
To manage supply chain risk, successful businesses plan for possible supply chain failures like port closures and natural disasters and form corresponding contingency plans. This includes choosing the right suppliers – and backup suppliers.
Choosing Backup Suppliers when Mitigating Supply Chain Risk
Partnering with backup suppliers or vendors, as opposed to only one preferred supplier, is a viable operational risk management strategy. In fact 53 percent of business leaders have already defined alternative supply chains, suppliers or partners to fill in gaps during times of crisis, according to Accenture, and 70 percent of business leaders report they constantly monitor and evaluate suppliers, as we stated in a previous post.
To maintain relationships with backup suppliers, businesses might consider splitting orders between multiple vendors from the beginning, with the majority of orders coming from a primary vendor and a small portion coming from a backup.
When selecting backup suppliers, businesses choose among those with different supply origins. “The backup supplier should be from a different city and come in a different port if applicable, due to the natural disaster and labor dispute issues that can occur,” said John Krech, 25-year veteran of the international supply chain industry and chief executive and president of Minneapolis-based RightOn Inventory. This way disruptions to the supply chain will be minimized in the face of political issues, natural disasters and the like.
A New Way to Find Suppliers
Sourcing one preferred supplier is hard enough, but finding the right backup suppliers can be a unimaginably time consuming. Unless Powerlinx is in play.
Members work with Powerlinx analysts to define optimal parameters for backup suppliers, and the Powerlinx matching engine efficiently pairs them with relevant suppliers looking for new business. Now businesses can form relationships with their ideal set of suppliers in the amount of time it used to take them to form a relationship with just one vendor.
With its database of 20 million companies around the world and its intelligent matching engine, Powerlinx can help your business find the right suppliers for mitigating supply chain risk. Learn more about how Powerlinx can help you source the right set of suppliers.
Featured image by Daniel Foster