Managing Supply Chain Risks and Consequences

Paul Hastings Date published: Aug 16, 18

There have always been risks associated with the supply chain process; therefore, there have always been consequences associated with both the management and mismanagement of this process. With the new High Level Structure being incorporated into the majority of updated standards, the measurement and monitoring of the process and the resulting consequences has never been more in the spotlight. 

As many businesses rely heavily on strong and robust supply chain processes, the need for transparency of the interrelated processes, interested parties and stakeholders, roles and responsibilities, identification of risks  has become crucial to the continued success of many businesses.

There have been many public instances over the past few years where supply chain processes have broken down. These instances have occurred for many reasons, but the main factors that played a part in the breakdown are:

• The inability of the supplier / interested party to continually meet the needs and expectations of the organisation
• All of the interrelated processes have not been identified and understood
• The expectations and intentions of the interested parties are not clearly understood
• All interested parties have not been identified

Any business relationship carries an element of risk and therefore all identified risks need to be controlled and the consequences mitigated. This can be done in a number of ways, but should include:

• Roles and responsibilities being clearly defined and understood by all involved in the supply chain;
• Top level management being involved in the business objectives and strategy;
• Interested parties being properly trained;
• Ensuring that there is documented information to manage the business system;
• Ensuring that the needs and expectations of interested parties are clearly understood.

When the above elements are missing, not understood, or not followed, disaster and confusion will undoubtedly be the outcome.

Based on the above, how can supply chain risks be mitigated or even eliminated to ensure that your organisation achieves its business objectives, remains competitive and is meeting all of its stakeholder expectations?

Many organisations implement a compliance / quality management system to help them oversee their business objectives and process management.

Compliance management systems provide a central and controlled method to manage all of the above risks in a number of ways:

• The inability of the supplier / interested party to continually meet the needs and expectations of the organisation
• A QMS will allow you to perform detailed and dedicated supplier audits and appraisals and will provide a platform for suppliers to directly upload their self-assessments to your central QMS system, automatically notifying the relevant stakeholders
• All of the interrelated processes have not been identified and understood
• A QMS will allow all key processes to be identified, tracked and measured through methods such as reporting and auditing
• The expectations and intentions of the interested parties are not clearly understood
• A QMS will allow you store key documentation, such as contracts, SLAs
• All interested parties have not been identified
• A QMS will allow you to delve into the key steps of each operation and add key stakeholders to the relevant stages, and, where necessary, assign the key tasks to these stakeholders, which can then be monitored to completion

A QMS will also help your organisation manage the key areas identified above:

Roles and responsibilities being clearly defined and understood by all involved in the supply chain

• Tasks and actions are assigned to relevant people, who are notified by the system and then measured against completion of these tasks

Top level management being involved in the business objectives and strategy

• A QMS will ensure that the right people are making the right decisions. This can be monitored and measured. External auditors can then see that senior managers have visibility of and are signing off on key business decisions

Interested parties being properly trained

• A QMS will allow the organisation to build dedicated training plans for all parties to ensure that they can carry out their responsibilities safely and correctly. Personal development plans can also be created and managed to help build continual improvement within the business

Ensuring that there is documented information to manage the business system

• A QMS will allow the organisation to store all key documentation relating to the business and to ensure it is available to all relevant stakeholders in a controlled manner

Ensuring that the needs and expectations of interested parties are clearly understood

• A QMS will allow the organisation to identify, measure and monitor key expectations and, where necessary, take the relevant actions.

Q-Pulse has a proven track record since 1992 of helping organisations with their supply chain processes. Offering document management, audit control, incident management, supplier and customer management as well as people and training management and asset management in one central electronic management system, it is the system of choice for organisations across all business sectors.