{"id":52535,"date":"2023-09-28T11:15:58","date_gmt":"2023-09-28T11:15:58","guid":{"rendered":"https:\/\/targetintegration.com\/?p=52535"},"modified":"2024-03-06T09:03:22","modified_gmt":"2024-03-06T09:03:22","slug":"best-practices-for-inventory-management-in-supply-chain-optimization","status":"publish","type":"post","link":"https:\/\/targetintegration.com\/en_in\/best-practices-for-inventory-management-in-supply-chain-optimization\/","title":{"rendered":"Best Practices for Inventory Management in Supply Chain Risk Optimization"},"content":{"rendered":"
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The global supply chain sector is expected to witness a projected compound annual growth rate (CAGR) of 11.2% from 2020 to 2027.<\/i><\/b>\u00a0<\/span><\/p><\/blockquote>

In recent years, numerous businesses have been impacted by unforeseeable vulnerabilities in their supply chains. This has resulted in costly product recalls affecting industries such as consumer goods, automotive, and pharmaceuticals, with recalls running into the millions. The most concerning aspect of these disruptions is their impact on both government and private organizations, which have struggled with cybersecurity breaches and the loss of critical intellectual property due to inadequate supply chain risk management practices.\u00a0 <\/span>\u00a0<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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While acknowledging, assessing, and mitigating supply chain risks has always been a component of the business landscape, successfully navigating today’s market structure has become more formidable than ever. The COVID-19 pandemic unleashed waves of volatility across all markets, compelling businesses to make significant reforms in their operations, marketing strategies, and supply chain procedures.\u00a0 <\/span>\u00a0<\/span><\/p>

Similarly, the ramifications of climate change, such as the Amazon Rainforest fires, have triggered a domino effect of material losses, international political conflicts, and human rights violations.<\/span>\u00a0<\/span><\/p>

On the political front, the Ukraine-Russia war has introduced disruptions in the supply chain industry. According to a Dun & Bradstreet report, more than 374,000 global businesses rely on Russian suppliers, with 90% of them based in the US. About 241,000 businesses depend on Ukrainian suppliers, of which 93% are based in the US.<\/span>\u00a0<\/span><\/p>

In such volatile and intricate geo-political environments, the concept of supply chain risk management has evolved. What was once centred around specific use cases has now expanded to encompass a wide range of internal, external, known, and unknown risk factors.<\/span>\u00a0<\/p>

In 2023, supply chain executives have revaluated their sourcing strategies in response to a range of challenges, including geopolitical instability.<\/i><\/b>\u00a0<\/span><\/p><\/blockquote>

A sound supply chain risk management plan begins with a comprehensive understanding of the types of risks that can impact a supply chain ecosystem.<\/span>\u00a0<\/span><\/p>

Categories of Supply Chain Risks \u2013 The Cornerstone of Supply Chain Risk Management<\/span><\/b>\u00a0<\/span><\/h2>

At the holistic level of the global supply chain, each component introduces a degree of risk that can impact your company’s performance, reputation, and financial outcomes. When these risks, whether they are external or internal, known or unknown, are left unaddressed, they have the potential to cause significant harm.<\/span>\u00a0<\/span><\/p>

Before delving into effective supply chain risk management strategies, let’s explore the specifics of these two risk categories.<\/span>\u00a0<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Identified and Unforeseen Supply Chain Risks<\/span><\/b>\u00a0<\/span><\/h3>

Identified risks are those that can be quantified and managed systematically over time. For instance, a supplier’s insolvency causing disruptions in the supply chain falls into this category. Similarly, risks related to cybersecurity vulnerabilities can be assessed through supply chain risk management software, which scrutinizes the IT infrastructure comprehensively. <\/span>\u00a0<\/span><\/p>

Unforeseen risks are the ones that defy prediction. These can encompass scenarios like the unexpected eruption of a dormant volcano disrupting the supplier network or a cybersecurity attack originating deep within the firmware of an electronic component. When it comes to mitigating supply chain risks, these prove to be the most daunting challenge.<\/span>\u00a0<\/span><\/p>

External and Internal Supply Chain Risks<\/span><\/b>\u00a0<\/span><\/h3>

KPMG forecasts ongoing disruptions in supply chain operations for the year 2023.<\/i><\/b>\u00a0<\/span><\/p><\/blockquote>

External supply chain risks originate from sources outside your organization. Their lack of predictability makes anticipation difficult, necessitating a greater allocation of talent, time, and resources for mitigation. Among all risk categories, external risks pose the most formidable challenges in supply chain risk analysis.<\/span>\u00a0<\/span><\/p>

External supply chain risks encompass various types:\u00a0<\/strong><\/p>