Globalisation has made the world smaller, making business across borders possible, however, this interconnectedness also increases risks associated with global markets, especially those associated with operational disruptions, reduced profitability and a damage to brand reputation. To combat these challenges, risk management for scm logistics is no longer a luxury but must be considered a necessity for businesses aiming to stay competitive and robust in the face of market disruptions. In such a scenario, the procurement team becomes instrumental in driving strategic business decisions that could either cause or solve these issues. The procurement team’s role is important to safeguard the business interests while ensuring continued growth and success. In this article, we take a look at some of the most common challenges associated with scm management and how an excellent procurement team can reduce these risks, while ensuring operations remain responsive and resilient to fight any uncertainty. 

1. Poor Supplier Performance

A supplier can make or break the operations of a supply chain company. A reliable procurement team will first assess suppliers based on financial viability, political stability and experience with natural disasters. Diversifying suppliers and building strong relationships with suppliers helps to ensure steady delivery and quality of goods. 

2. Demand Planning Complexity

Predicting demand correctly is the trick to prevent stockouts or overstocking. A procurement team with enough experience under their belt will use advanced analytical tools to prepare for these fluctuations and ensure inventory levels are always optimally maintained.  

3. Global Labor Shortages

Production lines can be heavily impacted by labour shortages. Procurement teams from reliable supply chain company typically work closely with suppliers to help them navigate staffing issues by setting up training programs and flexible strategies to manage the workforce.  

4. Rising Inflation

Profit margins can be heavily impacted by inflation if finances are not planned properly. One of the roles of the procurement team is to negotiate contracts with suppliers such that pricing is adjusted for inflation, so that costs can be predicted reliably.

5. Volatile Global Economy

Trade disruptions on a global scale are most common due to geopolitical tensions and economic instability in different markets. A responsive procurement strategy involves keeping a close eye on global events, building a diverse roster of suppliers across different regions so as to reduce exposure to risks from a single market for the entire production line. 

6. Complex Regulatory Environments

For businesses involved in global operations, regulations can make or break the entire system. Failure to comply with local regulations can lead to expensive fines and also cause significant damage to the business reputation. A good procurement team will make sure that all suppliers involved in the logistics management process follow local and international laws, while also conducting independent audits at regular intervals to maintain compliance.

7. Geopolitical Risks

Political volatility and trade wars can completely disrupt the smooth running of supply chains. It is important to build a diverse supplier base to navigate any challenges that may arise in a particular region without compromising on the health of the scm logistics operations.

8. Reputational Risks

In business, reputation is everything and it takes as little as a supplier’s unethical dealings to tarnish the reputation of your company. A reliable procurement team will conduct its checks and due diligence before onboarding suppliers to ensure they follow best practices and are in line with the ethical standards of the company.  

9. Natural Disasters and Climate Change

With the increasing risk of global warming, climate-related events pose a constant threat to global freight networks. A procurement team with a solid contingency plan in place will make sure suppliers are looped in, have ample backup including logistics and emergency supply chains. 

10. Cyber Risks

Most of the data for supply chains is digitally recorded. Cyberattacks in such a scenario can threaten and compromise the viability of your processes. The procurement team works proactively to counter this by building robust firewalls and security measures
Cyberattacks can compromise supply chain data. Jane ensures that all suppliers have robust cybersecurity measures in place, conducting regular security audits and training sessions.

The Jane Advantage

One of the most reliable ways to mitigate risks is by partnering with a logistics and supply chain company like Jane. With a team that has ample experience across different industries, you can rest assured that your business interests are in the best hands! Here’s how Jane offers a competitive edge to your supply chain 

  • Supplier Diversification: The risk is reduced when suppliers are not concentrated in one geographic area. This way, geopolitical, trade and economic tensions do not hamper the smooth flow of the supply chain process. 
  • Advanced Analytics: AI and predictive analytical tools are regularly employed to predict demand and stay battle-ready for any disruptions that may arise.
  • Collaborative Risk Management: The teams at Jane work closely with the supplier network and develop joint risk mitigation strategies.
  • Continuous Monitoring: Periodic assessment of supplier performance and conducting regular audits to check for compliance.
  • Technology Integration: Build cloud-based ERP systems in your supply chain for real-time visibility and security.

Your procurement team is the first line of defence against risks that the supply chain may encounter. It becomes important to partner with suppliers who are reliable, resilient and ethical and a good procurement team will be able to deftly handle and manage a network of suppliers. Procurement teams like Jane are a one-stop shop for all your supply chain needs. Thanks to continuous monitoring, supplier diversification and tech integration, Jane emerges as a leader among supply chain company and procurement solutions. Get in touch with us to discuss your requirements – Let us help you build and scale robust systems!