Supply Chain Risk Management:
Plenty of effort has been put into ensuring your internal business and processes have become more resilient in 2020. Have you invested time and energy in making sure your supply chain is equally robust?
Several lessons emerged in 2020 about how best to manage key vendors. Firstly, it is not just about managing the vendors where you have a direct relationship. Their supply chain is also important, down to the 4th and 5th tier suppliers.
Secondly, according to our customer feedback, as well as research from the Association of Supply Chain Management (ASCM), having a decentralized supply chain management model – where the day-to-day business managers are involved in managing the supplier relationship – has ensured greater resilience compared to applying a more centralized vendor management model. A centralized model would typically involve the procurement function dictating the customer-supplier relationships.
Decentralized models allow for deeper commercial relationships, which help identify and resolve potentially serious issues more quickly. A best-practice approach to delivering a resilient vendor risk management environment will include vendor analytics capabilities, 4th, and 5th party monitoring, concentration analytics, and automated reporting.