For any business, maintaining a robust, reliable supply chain is a key priority. Indeed, supply chain problems can damage a company’s ability to meet buyer demand, achieve healthy sales, and preserve cash flow and working capital. A chink in one part of a supply chain can cause problems throughout, which is why it’s important to be proactive and ensure your supply chain is resilient. So, what can you do to strengthen your supply chain and prevent potential problems before they occur?
Whether working with customers, prospects, professional service providers or business partners, implementing effective due diligence is an important part of business management. This is just as relevant when choosing supply chain partners. Just as we urge you to know your customer, we also urge you to know your supplier; partnering with the wrong associates can expose your business to unnecessary risk.
Although a supply chain allows you to outsource an activity, your business remains accountable for the result. This responsibility brings with it the need for careful risk monitoring; utilising advanced analytics and risk-assessment tools can provide vital insight.
Effective due diligence also means ensuring your supply chain is transparent. Do you know to whom your supply chain partners outsource their work? Can you be sure of their ethics and business practices? Your reputational risk is as important as other operational risks and, as a customer, you should minimise your exposure by holding frank conversations with your suppliers to learn about their policies and practices.
Just as you’d expect responsible business management from your supply chain partners, it’s vital to bear in mind any risks to which you expose your partners. When building your business, sustainability is key. Avoid getting ahead of yourself by expanding too rapidly. Instead, make sure that your business is operating efficiently, successfully and securely before you turn your attention to growth.
If you run into financial difficulties, not only is your own business at risk but, depending on the inter-dependence of your supply chain partners, you may also place them in jeopardy. Understandably, doing so may damage future relations.
Clarity and honesty are important in any relationship, particularly in business. Whether it’s with your bank, business partners or suppliers, be upfront about forthcoming challenges and opportunities. Collaboration is vital in navigating the bumps that arise in any business landscape, and your partners will be more flexible if they trust that you are keeping them informed of any developments or concerns. In fact, they will likely reward your honesty with greater confidence.
Although strong relationships are key to a successful supply chain, data analysis can often highlight red flags before they become apparent to the human eye. Utilising a reliable credit risk management service can help minimise your business’ risk exposure. From business acceptance to risk monitoring, portfolio management and data integration, you can access company records that are updated in real time, receive instant notifications if risk levels change and carefully select to whom you extend credit.
To learn more, read about Graydon’s credit risk management services.