Supply Chain Risk Management: What Your Business Needs

Summary: A supply chain is crucial for any business, regardless of industry type. And risks in the supply chain are inevitable. Several retail businesses find it difficult to cater to supply chain issues, but with the right processes in place, any brand can tackle them easily. To mitigate the supply chain risk as a fashion designer or brand, read this post.  Like any other industry, fashion is also susceptible to major changes. These changes are brought about due to this industry's periodic trends and dynamic environment. To keep up with the changes and to make brand procurements more flexible, reliable supply chain management is needed.  

A well-thought-out strategy to cater supply chain risks is essential. One can begin that by first taking proper steps to identify risks, assess them, and then formulate proper plans to mitigate them. Depending on the severity of the risks and the control to mitigate them, they can be classified as internal and external. 

Managing supply chain risks is important for different industries, especially clothing. That's because it helps in reducing manufacturing blackouts. 

Below listed are a few tips to make your brand's supply chain more efficient and better.

1. Figure out the possible risks 

In the fashion industry, your brand can encounter two types of risks: known and unknown. Known risks are those that you are already aware of and can plan for, such as seasonality or current trends. By managing known risks, you can eliminate the priority issues.

Likewise, you should also figure out the unforeseen risks, which are generally born due to economic issues, natural disasters, geopolitical issues, or cyber threats. With correct strategies and plans, you can figure out unforeseen risks. Then you can take corrective measures to eliminate major threats. 

2. Reduce inventory carrying costs 

Fashion brands with mismanaged supply chains tend to have expensive inventory carrying costs. But your brand can easily reduce the inventory carrying cost by carefully disposing of obsolete inventory. In addition, you can increase the purchasing frequency of components to keep the goods in a productive cycle. 

3. Create a framework of metrics 

Depending on the severity of risks, create a framework of metrics by collecting the data. It will allow you to figure out the appropriate solution on time. 

With a robust metric, you can also determine the impact of supply chain risk, your brand's tolerance threshold, and the risk appetite of the brand. 

4. Rely on automation 

Automation in the manufacturing and supply chain industry is highly in demand. It is one of the most effective ways to manage supply chain risk. By increasing automation, like augmented reality and artificial intelligence, brands keep a strong hold on their business processes. 

With advanced automation, you can get access to real-time tracking of transportation and production. It also increases the probability to reduce human errors and retrieve more accurate insights into your business. 

5. Follow a multi-outsourcing strategy 

Don’t keep all the eggs in one basket. The same goes for not relying on a single source when it comes to procuring raw materials and other goods. Multiplying the channels will reduce unforeseen risks. Follow the multi-outsourcing strategy, where you can hire suppliers from different parts of the world. It will allow you to keep your production and supply line under control. 

6. Prioritize known risks

Mitigating supply chain risks is a tedious task with multiple functionalities like the flow of goods and cash and the interchanging of information. Hence, analyzing and recognizing known risks is the first step in successfully managing any supply chain disruption. If not done correctly, it holds the chance to hinder even the simplest operations of the business.

Understanding what could go wrong in a business is the first step one must take before moving toward mitigating them. 

Most businesses begin by inspecting their production, then potential suppliers, logistics, and transport, and then finally understanding problems in distribution warehouses to make the mitigation process easier. 

7. Create risk awareness

Employees are the asset of any industry. Keeping that in mind, for the effective and seamless working of the processes at every level, distributing information about the risks is mandatory. 

Doing this will improve supply chain risk management in a company, and businesses will be able to handle it with more ease.  A company’s reputation can be at stake if the employees are not properly trained, which may lead to disruption in cost, level of quality, and delivery of the products.

Thus, addressing known hazards first can help reduce unknown risks as well. It will ignite a culture of risk awareness within the organization, and everyone will imply best practices to reduce and tackle risks in a business.

Wrapping up 

You can make your brand successful and sustainable with better supply chain risk management. Effective risk management also allows you to keep up with new trends and customer demands and reduce manufacturing blackouts.

Need to secure your supply chain? You can join hands with Fashinza. We offer real-time monitoring to help you meet your global needs.  Visit us at Fashinza.com today. Key Takeaways  Any change in the geopolitical citation, economic situation, or natural disasters can develop unforeseen risks. 

Use advanced augmented reality and artificial intelligence technologies to streamline your supply chain.