Risk factor associated with Supply Chain Disruption
Given the recessionary times, it did not come as a surprise when 35% more companies filed for chapter 7 bankruptcy than in previous years in 2008. Now that a supply chain disruption can cost a manufacturer up to $5 million, irreparably harm a brand and cause loss of customers, manufacturers are searching for ways to reduce exposure to supplier failure.
With supply chains become increasingly global, and ownership moving further and further from the original equipment manufacturer, risk factors come in many shapes- operational, managerial, geographic and more.
As such the manufacturers are taking various steps increasing transparency when it comes to supplier information, monitoring suppliers on dozens of critical factors, working with suppliers to improve stability and operational performance and extending strategies beyond Tier 1 suppliers to protect the extended supply chain.
One major challenge of supplier risk management is compiling all supplier information into one centralized location. Once the suppliers are in a single location, the manufacturer can create master supplier lists broken into categories, such as single source and global, making it much easier to monitor suppliers’ performance.
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