7 Supply Chain Risks to Watch out for in 2024

Higher the risk, higher the rewards.

While we have come across the age-old adage countless times in fiction and entrepreneurial speeches, businesses tend to steer clear of anything that remotely hampers a business continuity. In the world of supply chain functioning, risks, anomalies, or bottlenecks are a fair occurrence. Every SCM tends to design its action plan per the impact a specific type of risk may have on the overall functioning of the supply chain. Not to mention, identifying value chain risks marks the first step of a risk mitigation plan. Such early indentation gives an enterprise’s think tank ample headspace to chart out its response.

What are the different types of supply chain risk?

In this listicle, we are going to highlight the top 7 types of supply chain risks to watch out for in 2024 to maintain a market stronghold.

1. Financial Risks There’s no workflow without capital or owing to its mismanagement. Many businesses have global operations, and it becomes equally imperative for them to keep a tab on currency exchange rates, budget overflow, and cost capping of the supply chain processes. Not to mention, factors like global inflation and its impact on resources like energy, fuel, and workforce do create a few bothersome challenges for the management, too. Companies, to counter such friction, invest in data insight software that helps them by giving heads up for possible spikes in operational costs ranging from seasonal demands to ascending raw material procurement costs.
2. Compliance/Legal Risks Every nation has its legal compliance set, and organizations with multinational presence must account for its relevance to ensure smooth workflow. Such legality can range from a demography’s simple code of conduct policy and labor laws to ESG (Environmental, Social & Governance) rules. Management has to ensure it reaches the laid-out norms and avoid any penalties that can hamper its production plans. This includes all stakeholders (internal & external) to follow the guidelines.
3. Environmental Risks If you're not environmentally friendly, then you are not customer-friendly. Being sustainable is now the marquee virtue that distinguishes organizations from their competition. Customers, in their buying practices, factor in a supply chain contribution towards the environment, and if falling short, it can result in poor audience retention and customer satisfaction metrics, leading to an abysmal market stronghold. A proactive approach to minimize environmental risks would be to upgrade the traditional supply chain process with upgraded norms that align key stakeholders to be mindful of their carbon footprint. Being unaware of a value chain's detrimental impact on earth resources can call for strict penal actions that may leave an indelible mark on a conglomerate's brand value, hampering its revenue goals.
4. Geopolitical Risks The recent unrest in Ukraine and Sudan has highlighted the urgent need for enterprises to employ risk management frameworks. Such geopolitical changes due to shifts in governance, political unrest, and civil discomfort often lead to unsuitable working decorum for supply chain leadership. Though hard to predict, the action plan around the titular point can be drafted by keeping a constant eye on the political development of the demography where supply chain operations are being carried out.
5. Cyber Risks Every value chain function is now centralized. Data holds the key to insight shaping crucial decisions for the future of operations. And, in such a context, secure information keeping becomes the utmost priority. To safeguard the most valued entity, i.e., data, industries must employ cyber solutions that protect their information against any unwarranted online attacks from hackers, scammers, etc. Such network security firewalls against cyber risks, safeguarding a company's interest and precious information.
6. Logistics Risks Transportation of the final good is often considered the most essential leg of the supply chain as it directly deals with customers during its journey. With the transparency of operation making users aware of their consignment delivery status, logistics functioning needs to be at its A-game. This includes multiple operation pillars, from distribution centers to warehouses, last-mile delivery, and reverse logistics management. Any uncertainty in operation from external factors (like inflation, road closure, connectivity, etc.) to internal factors (mismanagement of consignment, lack of fleet, etc.) can lead to risks hampering logistics functioning.
7. Workforce Risks Each process depends on the personnel or a group of it. The reliance and success of supply chain tasks from a management point of view are duly driven by the assigned stakeholder. An organization benefits immensely from a skill set brought on by personnel, and in case of their departure, the enterprise does face a slightly uphill task of maintaining the fluency of operations. Other workforce risks range from union strikes to the absence of key employees during crunch situations, among others.

Handling supply chain risks needs proactive planning and investment. Though it may feel like considerable capital is being funneled in initially, risk management software pays off big time during peak bottlenecks. The clarity in decision-making gets powered by risk-mitigating platforms that simulate upcoming red flags, eventually firewalling a company from pitfalls resulting in loss of revenue. To know how exactly 3SC can safeguard you against types of risk in supply chain management, connect with us at https://3scsolution.com/contact-us.