Mixing Predictability With Agility To Combat Supply Chain Risk

Forecasting is a critical strategy in supply chain management and risk mitigation, and while this area of expertise has become a priority for more members of the C-suite, if the last year has taught corporates anything, it’s that the only thing certain is that nothing is certain.

That’s an important understanding for today’s business leaders, according to David Shillingford, CEO of newly-debuted Everstream Analytics, a company formed from the previous merger of Resilience360 and Riskpulse.

“The pandemic created enormous disruption and dislocation in global supply chains, and there is a lot of debate as to what lessons should be drawn from it,” he told PYMNTS in an interview. “On one side of the argument, it will never happen again. On the other side, it might not happen exactly this way, but something like it will happen again — and things like it are happening every day.”

Among the biggest impacts of the pandemic is that supply chain risk management is now a board-level discussion. Yet organizations continue to experiment and explore how exactly to evolve their risk management strategies. As Shillingford explained, there is a spectrum of approaches to mitigating risk that is nearly as vast as the risk landscape itself.

While much uncertainty remains, spurring a renewed focus not only on supply chain risk management but on what it should even look like, is a valuable mark of progress within the global market.

Driving A Holistic View

There are several other key developments that have emerged amid the ongoing pandemic beyond business leaders finally prioritizing supply chain risk strategies.

Another key trend is the emergence of leaders in their industry approaching this area of focus in a more holistic manner than it has been historically.

“By that, we mean looking at risk from an end-to-end standpoint,” explained Shillingford. “They’re thinking about it from sourcing, all the way through to product delivery and beyond, through the reverse supply chain.”

Increasingly, the concept of a “holistic” approach means driving visibility of the supply chain. Going further, he said, corporates are increasingly including risk as a part of that effort to boost transparency.

Take the payments piece of the supply chain puzzle. Risk in this area can stem from a variety of sources, from external cyberattacks to delayed payments from vendors. And while digitization can be key to enhancing automation and boosting visibility into transactions, if risk mitigation efforts are not approached holistically, they will be limited.

“The challenge is to digitize things end-to-end,” said Shillingford. “If your payments are digitized, but the actions on either side of them or in parallel with them are not digitized, then you’re missing a lot of opportunity.”

A Spectrum Of Strategy

While supply chain risk management strategies can be complex and multifaceted, there are two key characteristics of a successful program.

They include the ability for a company to predict risks ahead, and the capability to act with agility when unpredictable events occur.

In areas like finance and payments, this means securing a predictive view of the financial well-being and potential financial stresses along the supply chain. Taking more proactive measures to mitigate this threat has become even more crucial as a result of fast-paced volatility and the inability of traditional financial reporting cycles to present key information quickly and consistently enough.

“I can’t wait until the next cycle of a credit report,” said Shillingford. “Clients need to understand as early as possible if they have a supplier or business partner that’s suffering.”

Yet, as so many firms have learned over the last year, not everything is predictable, making it that much more important for an organization to be able to be flexible and resilient when a disruptive event occurs.

As Shillingford explained, being proactive and being reactive are not mutually exclusive. Rather, they exist along the same spectrum of supply chain risk management efforts and are equally important to an effective strategy.

Thanks to technologies like predictive analytics, businesses now have a wider opportunity to mitigate risk in the planning phase of supply chain operations. Likewise, they should also have backup plans in order to be able to respond quickly as the market ebbs and flows. Having both and bolstering each strategy through sophisticated, real-time analytics is a formula for a more robust supply chain.