What are the types of supply chain risk

Types of supply chain risks
Though the scale of risks is variable — some are common to global trade, competitive, compliance and associated with emerging sanctions and tariffs risks, for instance: others are unique and specific to the industry, location of operation, or partnerships. Risks may include growing labor costs or shortages, lack of carriers’ capacity, loss of competitive edge, higher product prices resulting in reduced margins, etc.
Actually, the top 3 global risks recognized by the experts are:
  • uncertainties in the trade flow;
  • climate change combined with dangerous weather conditions;
  • cybersecurity failures.
These are the three main aspects which are going to shape the 2019 risk landscape. Then follow the civil unrest, which may lead to disrupted highways, and access roads to industrialized areas as well as seaports and border crossings. Other threats include raw material deficiencies, extra costs, safety scares, anti-pollution measures, and severer environmental regulations.
But, managing vendor interactions, creating strong financial protocols, and being aware of the local challenges can help in keeping risks under control. At the same time, proper risk management can benefit in gaining an advantage over competitors, brand protection, and stimulate business growth.
However, supply chain risks might be solved through software solutions. A perfect example of such a solution is a TMS — transportation management system. The Logistic Management’s 11th Annual Software User Survey has already stated that TMS is one of the top three software solutions which are planned by the shippers for purchase or upgrade over next year. So TMS is not anymore a «nice to have» instrument but an essential component of supply chain risk management strategies for large and medium-sized businesses. Data analytics function implemented in the software solutions of such kind allows having insights not only into the financial transaction data but also into operational details so the specialist can understand where the potential risks lie. A major requirement for such a supply chain software development is quick and powerful automated scheduling algorithms which are able to monitor the whole supply chain and modify the route for each shipment automatically choosing the best option.
The present-day Transport Management Systems deliver the details of:
  • histories of shipment;
  • forecasts of demand;
  • options and provisions of the carrier;
  • freight-in-transit.
All these details can be shared in real time and automatic alerts can allow the shippers to identify the root causes of problems to take measures for improvement. Due to this fact Transport Management Systems have become essential elements of supply chains, which are nowadays vulnerable to a greater number of disruptions and less tolerant of delays.
Besides, some industries have to overcome the pressure of peak season demand and in case of disruption, any business needs to restore its shipping network to normal operation as soon as possible.
That’s why supply chain management software is an inevitable tool, able to provide the accurate details at the right time allowing to take weight decisions with regards to the risk profile of the business and the time period under consideration.
You might also read more about the welfares of supply chain management software and supply chain software and the workforce gap problem solving here.

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