When investing in new manufacturing technology, such as warehouse tracking software, organizations must be sure they are factoring in any risk that may exist for their company. However, a recent report from PricewaterhouseCooper and MIT found that two-thirds of companies only pay marginal attention to supply chain risk reduction. Meanwhile, 40 percent are investing in advance risk mitigation processes for operations and finances.
Organizations that only end up paying little to no mind to risk reduction were categorized as "immature" by the report, as they try to mitigate risk by increasing capacity or trying to bring in additional inventory. Companies also mitigate supply chain risk by creating and implementing business continuity plans and using a regional and global strategy at the same time, both of which may work out better.
"Our survey indicates supply chain disruptions have a significant impact on company business and financial performance, and companies that invest in supply chain flexibility are more resilient to disruption than mature companies that don't," MIT Forum founder David Simchi-Levi, said, according to Supply Management.
Numbers from this report showed 95 percent said dependencies by supply chain entities has gone up, 94 percent believe the change in extended supply chains occur more often and 94 percent said new products are now released more frequently.
In an effort to help cope with this, MIT gave five principles companies can use to more easily reduce risk, including:
– Knowing that disruptions impact business and financial performance
– Understanding that mature supply chains are resilient to disruptions and are thereby faster than those which are immature
– Investing in flexibility so that disruptions can be more of a good thing than bad thing
– Realizing that mature companies that invest in flexibility are more resilient than those that don't invest in risk segmentation
– Organizations with mature capabilities do better across all financial and operational areas
Leveraging technology can be key
Industry professional Gayatri Balaji wrote on Supply Chain Digital that technology, such as warehouse management systems, can help increase the visibility of relevant data and enable easier orders, shipment tracking and real-time monitoring.
"The best organizations are differentiating themselves by adding a layer of predictive analytics to their existing technology," he said. "By feeding data from their existing risk management systems into analytics and dash boarding applications, they are able to spot key trends, patterns and potential disruptions within supply chains and identify the right risk-mitigation strategies."
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