Out of necessity, companies have become accustomed to reacting to these unanticipated risk events, though often at a high cost in lost time and increased expediting charges. While major "black swan" events can be overwhelming to any supply chain, daily threats like weather, traffic and construction also can add up to costly delays, wreaking havoc on your bottom line.

The most common failing in such instances is a lack of end-to-end visibility across your supply chain. It may be that blocks of visibility were outsourced to logistics and transportation providers along with operational functions. Or perhaps visibility data is scattered across various systems and inaccessible in emergencies, having never been integrated on a single platform. Whatever the reason, an inability to see into the supply chain is crippling when risk events strike.

It’s not hard to see why. Without a complete understanding of where your assets are, both on the ground and in transit, it’s impossible to gauge an event’s impact on your supply chain and your customers. Thus, effective action is impossible. And if there is no clear visibility to actual conditions in the impacted area, you waste critical time trying to find pertinent information. Usually, only mass media sources are available, with reports based not on what you need to know, but on what makes good television.

The result is that customers are not proactively informed of delays, but rather find out when the outsourced provider is informed - or worse, the customers find out first. This means that decisions on alternate supply sources or transport modes come late, forcing you to pay much higher rates for limited capacity, or to miss out on capturing that capacity altogether.

But there is another way. Let’s compare the low-visibility, reactive scenario just described to a high-visibility proactive response using Alert, Assess, and Act to empower efficient and effective risk management. Imagine a global company that sources and sells around the world. What if this company were able to visualize all of its facilities, routes, suppliers, warehouses, distribution centers, and customer locations on a digital map, along with critical infrastructure like ocean and air ports and transport lanes? The details of this information typically reside in multiple silos within a company, so if you could pull this together into a single platform, imagine the value this could bring.

Once you had all of your operational data consolidated and visualized, what if you could tap into a ton of big data from more than 100 different risk sources, all brought into a single technology platform. The platform would constantly monitor this data in real-time looking for an intersection of risk events with any of the company’s supply chain assets. When such an intersection occurred - indicating that aspects of the company’s supply chain could be in jeopardy - Alert, Assess, and Act would be triggered. First, an automatic alert based on the company’s preference would pop up on a screen in a command and control center or on a user’s device, or be sent as an email. Proactive alerting is a key element in managing risk because it warns of potential problems early, giving you more time and often more options to address the situation.

Suppose, for example, this company had crucial suppliers in Boston. At the first indication of last winter’s huge storms, alerts would have been sent. By clicking on the alert, the company would have been able to assess the potential impact of the storms, seeing a list of all of its assets at risk, with each supplier listed by name and location, along with appropriate contacts. From that alert and assessment, the company could then take effective action by initiating email, text or phone communications to check on specific orders. It also could send a survey to all potentially affected suppliers, asking for their status and ability to fill pending orders - a much more efficient process than separately calling each one.

The point is, time and clarity are key to managing supply chain risk. The sooner you can paint a picture of what is going on in the affected area, the sooner you can make decisions. And when available options are running low in an impacted area, the first in line typically get served at a lower price than late comers. Additionally, the ability to have all the information organized on one screen saves analysts time that previously had to be spent checking with different suppliers and transport providers and trying to get on-the-ground information. In a consolidated view, users can check weather maps, traffic cameras or see pertinent news feeds, which gives them the confidence to make faster and better decisions.

Moreover, information captured over time allows a company to enhance and better understand the risk profile of different areas. An historical risk event analysis tool that aggregates internal and external data over time into color-coded maps, allowing analysts to identify the degree of historical risk for any location at a glance, can be very useful when considering a change of supplier or a network redesign.

The bottom line is this: what you don’t know can hurt you, and hurt you badly - but it doesn’t have to. Today’s technology can put at your fingertips the visibility and information you need to understand, assess and act on potential risks to your supply chain to mitigate or avoid serious harm. The result can be tens of millions of dollars saved annually and a higher customer satisfaction.  So, reactive scrambling or proactive preparedness? The choice is easy.

Source: IDV Solutions