The Importance of a Secure Supply Chain

What is Supply Chain Management (SCM) and why is it important? 

The supply chain are the people and processes that are responsible for producing and delivering a product or service. More than just the logistics, it is a process that represents the combined efforts of many organisations - from raw materials, manufacturing processes, distribution networks to the final product or service.  

Supply chain management (SCM) are the processes and strategies undertaken to overlook the systems and activities across an entire network. Such management aims to improve performance and move through each stage of the supply chain economically and efficiently.  

SCM can also cater to changes in demand and supply, helping to deal with risks and threats while meeting customer demands and expectations. 

Overall, it aims to provide the benefits of a collaborative network - from suppliers to manufacturers to distributors. As the security of a supply chain is increasingly important in a global economy, it relies on the ability to address, manage and communicate throughout the entire chain to align objectives and needs. This in turn can reduce costs, increase profits, improve customer loyalty and satisfaction. 

What is Supply Chain Risk Management (SCRM)? 

The modern supply chain has become complicated, where vulnerabilities have become varied and a need for a secure network essential. While not all threats can be monitored, the majority can be accounted for and minimised, even completely avoided.  

Within a supply chain, there is a need to be aware of the risks throughout every step - including the known and unknown risks. The more extensive the chain, the greater the chance for risks disrupting business operations and outcomes.  

Supply chain risk management (SCRM) aims to identify risks in order to develop and implement solutions to support an organisation throughout every stage of a crisis or disturbance. It enables a business to take a proactive stance against threats and efficiently implement the appropriate strategies. A SCRM plan is considered an important aspect of a business' overall comprehensive risk management and business continuity strategies.

Supply chain risks and disruptions 

A disruption to the supply chain can stem from internal or external events. The more complex a supply chain - whether this means international networks or a high frequency of touchpoints - the more susceptible a chain is to risks.  

Internal risks to the supply chain 

Internal risks are those which a company have control over, including the ability to mitigate them. These include manufacturing risks i.e. internal operations, business risks i.e. changes to critical employees and planning risks I.e. incomplete or inadequate assessments or analysis.  

Once internal risks and threats are identified, a comprehensive and proactive SCRM plan can monitor these and recommend actions to address them before they arise. 

External risks to the supply chain 

External risks are those which a company does not have the ability to control. Even with a SCRM plan in place, they can be difficult to identify and monitor. However, should they occur, being prepared for a well-managed approach is essential. 

Such risks include environmental risks - which could be changes to social, economic or even the climate, including natural disasters - as well as demand and supply risks caused by disruption of materials or even misinformation at any stage of the chain. 

Risk management planning can help navigate these external changes and communicate with an entire network in order to remain operational when faced by challenges outside of the control of the business. 

A lack of transparency 

Many contributors are involved within a supply chain in order to produce the final product. Managing all stakeholders can be challenging, however poor communication and lack of alignment can be damaging.   

A potential lack of transparency can not only be damaging to the organisation itself, but also the reputation of those it is associated with. The expectations of consumers are shifting, with the origins, manufacturing and distribution processes, treatment of employees and many other aspects are deemed just as important as the quality of product or service itself.  

A SCRM plan should include in depth analysis of each supplier before an agreement is set. This data can expose internal and operational practices to ensure they align with a business' needs, objectives and ethics before forming a partnership. A lack of information is not a risk worth taking. 

The risk of expanding globally 

Many companies continually look to expand operations, whether entering new markets or going global. When entering a new market, there can be an array of different risks and challenges. Increasing the complexity of a supply chain can open a company to new financial and legal risks. It could impact physical processes including importing and exporting goods, even present challenges in managing relationships and cultural differences. 

As a company makes strategic decisions in order to grow, there must be changes to a SCRM plan in order to address new, related risks in these environments. 

While navigating these differences from country to country, regulatory obligations are also constantly shifting. This can add a layer of complexity when moving into markets across the world  and remaining compliant.

The benefits of a secure supply chain 

Developing and implementing a supply chain risk management system can place a business in the best position to form a proactive approach to risk. 

While taking a proactive stance can identify and mitigate risks effectively, it also shows a business is focused on protecting the security of their supply chain. Utilising a comprehensive plan and understanding related risk can help gain a competitive advantage, prioritise the brand's reputation and drive growth.  

Collaborative efforts between key stakeholders can also create value within a supply chain. Ongoing communication enables a business to form new relationships and enhance coordinated efforts between all stakeholders to design a strategy that can see all parties succeed and grow.

The role of Standards in supply chain security 

Standards provide the benchmark for which every aspect and output of a business should meet. They are informative documents which can provide a framework for any business in the supply chain to improve efficiencies and consistently deliver through structured processes and strategies. 

Standards can not only assist a single business within the chain but support overall management efforts and focus on improving operations at every touchpoint from start to end.  

For example, the raw materials which are sourced from one business must meet certain requirements in order to function or fulfil the next business' requirements. Another example would be the need for efficient logistics management to meet tight deadlines or providing alternative solutions if the transportation of goods has not met the right timelines. 

There are a range of Standards which can assist in all aspects of supply chain risk management. These include:

• ISO 28000 which specifies the requirements for a security management system, including those aspects critical to security assurance of the supply chain.  

• Set of ISO/IEC 27036 Standards provide guidelines and requirements for information technology and security techniques to help improve, maintain and review supplier relationships. 

• ISO TS 22317:2015 provides guidelines for a business impact analysis for a business continuity management system and provides guidance to help establish, implement and maintain a formal and documented BIA process. This analysis is critical to collect data to help predict the consequences of a threat to the business. 

• ISO 28001 describes the requirements and guidance for implementing supply chain security, assessments and plans within international supply chains to establish a minimum level of security. 

• ISO 31000 gives guidance on managing risks faced by organisations which can increase the likelihood of reaching business objectives, improve the ability to identify risks and allocate resources to tackle issues in any stage. 
  
  

Prioritising the need for a secure supply chain 

The ability to identify and mitigate risks while working collaboratively within a network of suppliers is an invaluable asset for any business. An understanding of risk and a focus on supply chain security can drive growth and performance of a business, while gaining competitive advantage, prioritising brand reputation and building long-lasting relationships.