Managing risk is crucial for reducing supply chain risk. There are several strategies to minimize risks, including risk transfer and risk mitigation. Risk transfer is a strategy whereby companies shift some risks to suppliers, while others remain within the organization. Transferring risks is essential because avoiding risk puts the entire organization at risk. Various tools such as insurance and agreements between vendors can help mitigate organizational risks. However, a vendor cannot fully mitigate risks on their own.
Supply Chain security is more and more heavily focused on digital security and prevention of cyber attacks. For instance, companies providing critical components to the DoD must ensure their supply chain is secure. Cyberattacks can compromise the integrity of information and key industrial processes and degrade commercial functioning. Recent incidents have highlighted the importance of supply chain cybersecurity. A recent ransomware attack on Colonial Pipelines highlighted the importance of protecting sensitive information and developing plans to protect the supply chain from attacks. Those responsible for providing critical components to the DoD should also invest in building resilience against cyberattacks and gaining access to reserve components to meet their needs.
The complexity of supply chains creates a unique set of risks. Supply chain security can fail to protect the supply chain, which can lead to shortages, inflation, and factory closures. Ultimately, supply chain failure can even threaten national security, which is a nation’s ability to protect its citizens. The key to supply chain resilience is to keep up with the challenges of the ever-changing global environment. However, this is not as easy as it sounds. There is a need for more research on the issues of supply chain security.
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