Risk and Tools of Supply Chain Management (SCM)

The world is headed toward a new era of globalization, marked by increased political fragmentation but stronger global digital connection. This challenging environment presents many risks which supply chain managers must carefully plan for and navigate.

The nature of present day globalization is changing. Global trade agreements are being reconsidered; new trade restrictions are being introduced, unrestricted flows of capital are becoming regionalized, and political alliances are being reshaped. At the same time, however, society is trending towards greater global connection. Internet usage continues to increase; use of digital devices continues to grow; global data flows more freely than ever, and global travel increases each year.

There are five key risk management tools to deploy:

1. Scenario Planning.

We live in a volatile, uncertain, changing, and ambiguous world. The future cannot be predicted. Supply chain managers must plan for multiple scenarios to determine where and how to invest to grow existing markets and/or develop new markets. Keys to successful scenario planning are maintaining a strong position in the core business, placing reasonable bets, and establishing a repeatable process to consistently refresh, stress test, and identify new scenarios.

2. Localization.

Supply chain risk caused by government policy can be greatly reduced by establishing local operations. The old model of large scale global production and standardization lacks flexibility and velocity to compete locally. Supply chain managers must plan smaller, flexible operations closer to customers. This necessitates the development of local eco-systems of suppliers and business partners. Keys to success include investing in local people, developing a clear plan for social awareness and inclusion, and implementation of appropriate technology to reduce physical assets and allow customization of products and services.

3. Digitalization.

 Big data and internet of things create tremendous opportunities to increase supply chain velocity and create new forms of customer value. Digitalization enables faster end-to-end decision making to compete locally while managing globally. Supply chain managers must develop a clear digital strategy which links all partners and provides flexibility to respond to market needs. This strategy can include 3D printing, predictive analytics, web-based mobility, and use of dynamic sourcing models.

4. Government Advocacy.

 Offering the best products and/or supply chain is no longer enough to compete. Governmental and international laws affect supply chains both operationally and financially. Government advocacy is primarily (i) educating on behalf of customers, employees, and shareholders to inform on issues important for your company, and (ii) building relationships to strengthen your company reputation and establish climate of trust. It’s important to build voice of your employees and stakeholders to tell the story of your company before key legislative and regulatory decisions are made.

5. Global Diversity & Inclusion.

Diverse teams generate greater innovation and better results. Global diversity is the variety of skills, training, experiences, perspectives, and cultural backgrounds in a company. Inherent diversity (gender, ethnicity, and sexual orientation) and acquired diversity (cross-cultural experience and educational training) are contributors of Global Diversity. Supply chain managers must be champions for global diversity and inclusion by increasing flexibility in the workplace, decreasing unconscious bias through education and awareness, and intentionally pursuing diversity and inclusion in recruitment, leader development & training, and cross-functional training practices.

As an emerging part of enterprise resource planning, supply chain management software includes a variety of specific tools and resources to help companies make their supply chains more efficient. These tools also help you optimize production by increasing the efficiency of purchasing and handling the materials and supplies coming in. 
Following  are few  supply chain management tools that make these software packages so valuable to the companies:

1. Shipping Status Tools: Alerts and Updates

One of the popular features built into supply chain management software is related to providing timely information on shipping. Typically, large companies have large-volume supply chains, with many different types of cargo shipped to customers around the country or around the world. Digital alert and update features make shipping transparent, tracking these logistics for stakeholders.

2. Order Processing Tools

This type of supply chain management technology works with supplies at the point of intake. Order processing helps companies better understand what’s happening when they receive deliveries of different products. Order processing tools typically include several different types of metrics and identifiers to help the business with intake analysis, one of the many steps toward ensuring on-time delivery to your customers.

3. Lean Inventory Tools

The idea of lean inventory, also known as just in-time inventory-JIT, is emerging along with certain kinds of supply chain management tools. The idea is that companies order only what they need immediately, based on current and projected customer demand. The overall goal of this practice is to optimize your inventory planning by cutting down on warehousing space, inventory costs and the different procedures of storing excess inventory.  Lean inventory tools can provide quite a bit of return on investment for a business, decreasing the need for real estate and labor force.

4. Warehouse Management

This type of supply chain management tools can help companies manage their warehouse’s day-to-day inventory operations. Now a days , vendors have created technology that helps  warehouse management, including supply chain performance tools and tools for evaluating the condition of inventory materials.

5. Freight Handling

Supply chain management tools can also incorporate various types of industry-specific freight handling functionality. For example, the evolution of cold chain logistics and new regulations concerning refrigeration and freezing for perishable goods has changed compliance standards. Therefore, some SCM platforms have integrated technology that can verify that those goods were kept at the proper temperature right up to the last mile of delivery.

6. Bid and Spend Tools

Sophisticated supply chain management tools can help you dig down and take a rough look at what you’re spending on each item that you take in and send out during production. These tools can also assist you in evaluating bids from different suppliers by helping you spot opportunities for improvement.

7. Supplier Management

Supply chain management tools can also help businesses get a better understanding of how they relate to their suppliers. Supplier management tools show the history of a business partnership and how it affects the supply chain. They can show the level of value and quality that each of their suppliers have brought to the process. Supplier performance reports are just one example of a feature built into supply chain management tools that show, in general, how a given supplier has contributed to a business model. With this information in hand, decision makers can act more confidently to change or otherwise manage supplier relationships.

8. Demand Forecasting

This supply chain management tool work on a predictive model. They help you anticipate your customers’ demand in order to speed up or slow down your supply chain processes. Oftentimes, demand forecasting is a part of a supply chain management software dashboard. This feature allows you to manage your supply chain processes in a much more modern way. Demand forecasting and related planning resources help companies achieve cost savings and business process improvements through more accurate planning.

9. Collaboration Portals

With modern supply chain management tools, it’s also possible for companies and their suppliers to work together on supply chain processes. This is valuable for stakeholders, because it can eliminate many different challenges, such as communications issues, bottlenecks in requisition and ordering, etc. With self-service Internet portals, companies can authorize suppliers to do certain kinds of documentation and/or automate parts of the ordering process.

10. Security Features

There’s another element of SCM software that’s focused squarely on security. Companies have to think about what types of data may be sensitive. For instance, data about different types of supply chain orders and volumes may be useful to competitors, while financial data may be vulnerable and compromised. So a range of supply chain management tools provide security for data in transit, and globally monitor whatever data assets are inside a general SCM system.

11. Compliance Tools

A given company may have certain compliance responsibilities according to its industry. Compliance tools are built with those responsibilities in mind. Again, with product-centered businesses, compliance may be related to cold chain storage or other handling requirements. With other businesses, it may be related to financial data and customer identifiers. Either way, compliance tools help to maintain compliance standards.

12. Audit Tools

These SCM features can be useful for eDiscovery or for other situations, including legal challenges. They may also be helpful in business-as-usual, where it’s standard practice to keep an outside set of eyes on documenting your supply chain process flow.

13. Long-Term Supply Chain Evaluation

Like other kinds of enterprise software, supply chain management tools can often be split up into short-term and long-term focused tools. Long-term evaluation tools may show key trends in how supply chain products are used in demand ebbs and flows. Aggregated supply chain analysis make it easier to pursue change confidently, by providing greater supply chain visibility than what would otherwise be possible. This provides valuable insight into what’s really going on in the complex business processes that seem opaque during day-to-day observation.

Think about how these supply chain management tools could empower your business to innovate your operations in the digital age.