Are you at risk from suppliers causing supply chain disruptions? Did you know that companies announcing a supply chain failure experience an average share price drop of 9%?
Risks with respect to a company’s supply chain, and in particular both their direct and indirect suppliers, have become operational concerns from the front lines to the boardroom given the slow economic recovery and recent spate of supply chain disaster headlines.
For the last several decades, supply chain risk management has been primarily focused on operational efficiencies such as:
- Forecasting errors
- Capacity restraints
- Just-in-time inventory management
- Transportation risks (delays, damage, re-routing, etc.)
But as Tier 1 and Tier 2 suppliers collapse under the weight of financial distress, and key risk performance indicators are now included in investment and strategic decisions, supplier risk management has taken on a new, urgent need.
According to a 2011 study by Accenture on Global Risk Management, the types of risk to which companies are exposed, as well as their severity, are growing. Companies are increasingly concerned about the spectrum of risks, from supply chain to operations to regulation to reputation and financial fraud and failure.
Aravo can help
Aravo has helped many companies across industries mitigate supply chain risk by providing an automated, flexible, scalable SLM solution that provides a single, centralized, 360 degree view of supplier risk across business units and geographies.
The 3 M’s of Risk & Compliance Management
- Measure: Create a 360 degree view of supplier information, including data on your supplier’s suppliers. A 360 degree profile means that the buyer can compile risk information from internal stakeholders or IT systems of supplier performance and value, real-time information directly from the suppliers themselves and validation of information from third-party data feeds such as LexisNexis and Accuity.
- Monitor: Identify the risk measurements that are most important to the buyer, their leading indicators and the internal business owner for each risk area. Keep an unwavering watch on these risk measurements such as receivables, days of inventory stock, geo-political unrest in the region, looming strikes or severe weather forecasts.
- Mitigate: Develop an early warning system of supplier health, and alert the right business owners. Enable the collaboration on mitigation and business continuity planning from alternate supplier sourcing to contract renegotiation.
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"The types of risk to which companies are exposed, as well as their severity, are growing. Companies are increasingly concerned about the spectrum of risksfrom supply chain to operations to regulation to reputation and financial fraud and failure."
Report on the Accenture 2011 Global Risk Management Study