Ten Golden Rules of Supplier Risk Management by JAGGAER

Supplier management is widely understood to mean both the measurement and reduction of potential risks associated with tier one and two suppliers. The risk management approach has increasingly become a priority recently for purchasing directors and risk managers due to disruptions such as the COVID-19 crisis or the Suez Canal blockage.

The strategic value of suppliers has been on the rise for several years now, and consequently reliance on supplier performance has increased as well. Nowadays strategic suppliers are viewed as business partners rather than levers for cost reduction, suppliers are viewed as strategic business partners, which has shifted strong focus to leveraging these supplier relationships in ways that maximize value and ROI while eliminating potential risks.

The objective is to control these risks and to consolidate modern production methods (supplier diversity, lean management, just-in-time, O stock, etc.) while mitigating and minimizing the consequences of supply chain problems. Risk management is also essential to alleviate situations that are beyond the organization‘s control situations that are beyond the organization‘s control (physical distance separating the buyer from the supplier), geopolitical (areas deemed to be “stable” can suddenly tilt) or even geographical (risk of tsunami, earthquakes, etc.).

In order to prepare for these risks and disruptions you need to create a crisis response playbook, looking at past and present data to inform decisions and create a framework to deal with unexpected disruptions, both large and small. Download this whitepaper to explore the checklist of the Ten Golden Rules of Supplier Risk Mangement and develop a gameplan to deal with potential risks.