use these tips for supply chain risk mitigation

5 Effective Tips to Mitigate Risk across Your Supply Chain

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Risk is an inherent element in any business endeavor. However, one of the core goals of any experienced manager is finding ways to mitigate risk, without sacrificing the constant quest for new opportunities. When it comes to supply chain, risk mitigation is a multi-faceted effort, because it goes beyond your company and its internal actions.

The Supply Chain – a Complex Network of Stakeholders and Beneficiaries

When you conduct a risk analysis of your supply chain, you start with your own internal controls and policies and your team. How do warehouse workers handle goods? Is the correct temperature maintained across the entire cold chain? Are stocks permanently updated in the central database?

But you also need to look outside your own company to identify potential risks. Are your providers fully certified for the operations they perform or products they supply? Can you rely on your vendors for last-minute changes in an order? What is the true cost of continuing doing business with certain business partners?

In this context, supply chain risk mitigation involves decisions such as:

1. Diversifying Your Network of Vendors and Suppliers

The old saying about not keeping all eggs in the same basket apples perfectly to the post-pandemic supply chain. The period between 2020 and 2022 showed us how fragile long supply chains are. Any disruption in a distant place can put a stop to business operations in your area.

Thus, to reduce this risk, companies switched from relying on big and cheap providers in Asia to finding several smaller providers at closer range. This approach ensures that, even if there is disruption in one area, affecting one supplier, the others can step in.

2. Flexibility Is Key When Looking for Providers

When you are looking for a new provider, for example for packaging solutions, look beyond the basic service the company provides. Can they go the extra mile for you? Are they flexible enough to assist with other services?

For instance, Logistic Packaging can help your company:

  • Identify problems in the supply chain caused by inadequate packaging
  • Recommend the best returnable packaging materials to solve the problem
  • Design and produce fully customized packaging solutions
  • Assist you during the post-sale period to implement the new packaging materials.

This flexible and hands-on approach is the reason why we continue maintaining successful business relations with major companies across the European Union, both before and after the pandemic.

3. Calculating the True Opportunity Cost

Some costs appear very high – until you do the math and realize that you can offset them in a reasonable period of time. Some costs appear very small – until you add up all the overheads and realize that it is not such a good deal for your company.

Supply chain risk mitigation involves a detailed number crunching for each type of investment your company makes. When it comes to packaging materials, for instance, modern reusable plastic packages have a higher purchase cost compared to other packaging solutions (wooden pallets, cardboard boxes).

But the overall total cost of ownership of reusable packages is significantly lower compared to other packaging materials. When you draw the line, you realize that plastic packaging achieves full ROI, while other packages do not even come close to breaking even.

4. Constantly Building Resilience across the Supply Chain

Supply chain resilience is not a set-it-and-forget-it task. As you diversify your network to make it more resilient, you also get more segments and elements to oversee. A single error or lack of compliance in one spot can have a negative impact on your ability to deliver orders to clients on time or to continue producing high quality goods.

Continuous communication is the only way of refreshing and reinforcing best practices among vendors and suppliers. This is beneficial not only for your company, but also for your suppliers in their work with other clients.

5. Using Actionable and Relevant Metrics to Measure Success

How do you define success across your supply chain? What are the metrics you use to measure it?  One of the biggest problems for your suppliers and vendors is not having actionable metrics to monitor and benchmarks for success.

Without a chart of milestones and key performance indicators, both they and you as logistics manager will never know if the supply chain works well and is resilient.

Logistic Packaging is your long-term partner for professional packaging solutions and expert advice to make your supply chain more resilient. Send us an email to start discussing your packaging challenges with us!