In all stages of the procurement process, there are risks. There is the supply chain in the overall big picture, of which procurement is involved. Suppose you think about the main purposes of procurement. In that case, they are essentially the preparation and processing of a demand needed to manufacture a good or end process that is meant for a consumer.
The supply chain is the entire process that gets the product in the hands of the consumer. Because there are so many steps along the way, many risks need to be analyzed.
It’s always a good idea to have human thought behind some evaluation, but having supply chain and risk management software can also be a benefit to help you identify and analyze risks more thoroughly. Read on to learn about supplier audit management software and supply chain and risk management software and what they do.
Supply Chain and Risk Management Software: Identifying Risk
Before you look for supply chain management software solutions, you should be well aware of the steps needed to identify supply chain risk. Generally, five steps should be taken when attempting to identify risks within the supply chain. It’s easier to identify these with the use of supply chain and risk management software, but you can self-evaluate as well. These include:
- Identify the risks. Statistically speaking, there will be much more than one risk within the supply chain and procurement process. There will be environmental risks, financial risk, security risks, natural disaster risk, etc. Identifying these is paramount before moving on. Any robust procurement department should have a risk management solution plan in place to mitigate any of these would-be problems.
- Analyze the risks. Are any of these risks that could potentially bring the business to its knees, or are they merely potential annoyances that will slow down production? Assigning importance to risk is an imperative task.
- Evaluate the risks. Once you’ve analyzed the risks, you then need to assign them in order of importance. This is often where supply chain and risk management software comes in handy—with analyzing and evaluation.
- Contain the risk. Is the risk a real threat that requires daily monitoring, or is it a vague potential “maybe” that’s last on the list? Eliminate what risks you can.
- Monitor risks. For every risk you can’t eliminate, monitor what you can’t. Keep a close eye on potential problems. This is another situation where supply chain and risk management software can help.
Supply Chain and Risk Management Software: What Does Supply Chain Management Software Do?
It is, of course, important to understand what supply chain software does. Unlike other types of procurement software or eAuction software, it’s specifically designed to manage and evaluate risk. These programs can help you make decisions and can monitor situations in real-time. Depending on the exact program, supply chain and risk management software can:
- Evaluate risk for you based on the parameters you enter into the program
- Critique specific vendors and suppliers before you use them for potential risks and vulnerabilities (eSourcing)
- Collaborate with your department, your company, and out-of-company with your suppliers and vendors in real-time to help mitigate risk before it occurs
- Organize your suppliers to help separate your strategic and preferred suppliers from others
- Monitor suppliers and their information to uncover any unknown risks as well as help to monitor risky suppliers in real time
- Offer real-time information to catch potential problems right before they happen or as they are happening
This type of software’s automated nature can help pinpoint risk that otherwise may not have been noticed by human analysis. However, it’s also a good idea to have human analysis as well because someone who well understands your market and industry can provide a solid opinion to help you determine the severity of perceived risk in your supply chain.
To learn more about supply chain and risk management software, or to request a demo, contact EC Sourcing Group today by calling us at 973-936-9672.