The scope of supply chain risk targeting your business is simply too broad to manage without the aid of digital tools. And by digital tools, I don’t mean Excel. Here are the top 3 reasons you should be using digital technology to make your business more resilient.
#1: To Reduce Unknown Sources of Business Interruption
Can you personally read every news source in the world, every day, to make sure there aren’t any looming events that are going to disrupt your supply chain and your business? Of course not. What if you had a few more people on your team—could you do it then? Again, no. What if you used a service like Google Alerts? Trust us: Still no.
If you’re relying mostly on manpower to identify risk, it’s absolutely not possible to stay on top of it all. But there is technology out there that can help: digital technology like AI and machine learning can do the work for you at a fraction of the time, at a fraction of the cost—and with a much better result.
#2: To Stay Ahead of the Competition
Research from The Hackett Group shows that the majority of companies are planning to implement technology tools for risk management in the next 2-3 years—and 63% of them are planning to do so specifically for supply chain risk (see chart below). The only tool companies aren’t planning to implement in the next 2-3 years? More spreadsheets.
Use of Tools in Risk Management, Current and Projected
Before long, companies who don’t have a digital program for risk management are going to be in the minority. So if you want to get ahead of the competition in the short term, and avoid falling behind the competition in the long term, it’s time to make a move.
#3: Because Fast Action Can Save Your P&Ls
Scenario: Imagine you’re a chemical distributor, and you find out that there’s been a fire at a major oil refinery that’s part of your supply chain. Do you think the first thing they’re going to do is call you up and tell you about their problem? Unlikely. But if you have tools in place that let you know about the fire as soon as it happens, you can make moves to keep your business intact: for example, by purchasing what you need from another supplier before the rest of the market tries to do exactly the same thing.
The purchasing advantage in this case can be huge—hundreds of thousands of dollars for just one event. Now imagine all the other events you could avert with fast action. The potential positive impact on your P&Ls should be clear.
Hopefully we’ve convinced you that digital technology is a key to your risk management practices—and that using spreadsheets doesn’t count!
riskmethods was acquired by Sphera in October 2022. This content originally appeared on the riskmethods website and was slightly modified for sphera.com.