Familiarizing yourself with unique concepts and terms within your industry is vital for success. If you own a business, particularly in the e-commerce field, you need to understand the concept of supply chain risk management.
In today’s article, Overflo is here to break down this concept into three categories to help give the most comprehensive view. We will discuss what risk management is, what a supply chain is, and how they correlate.
If you’re new to the concept or simply need a refresher on what this concept is at its core, this article is for you!
What is Risk Management?
Risk management is a term that floats around many industries. From retail to cyber security, to healthcare, and everything in between, you will find the term risk management is discussed. That’s because it’s a necessary tool if you want to ensure efficiency and avoid mishaps.
Risk management is the act of predicting potential accidents and casualties that a process may encounter and preemptively creating strategies to combat them. These strategies can be in place to avoid many circumstances, especially financial losses. To sum it up in short, risk management is preventive action.
What is a Supply Chain?
A supply chain is a commonly used term in the world of retail and e-commerce. Liken to its name, supply chains are a chain-like system in which a company relies on several elements to be able to supply the consumer with its product or service.
These elements can include the following and are typically done in this order.
- Production
- Vendors
- Warehousing
- Transport
- Distribution
- Retailers
Each element in the supply chain is vital. These elements share an essential role that will ultimately ensure your product lands safely in the hands of the final consumer. Without every part of the supply chain, a business can not exist.
How do Risk Management and Supply Chains Correlate?
Now that you know what these are separately – let us discuss how they correlate. That is where supply chain risk management comes into the picture.
Supply chain risk management is the act of using risk management strategies to avoid mishaps within the supply chain. That is the basic definition. In the first half of the supply chain risk management equation, you have strategic planning to minimize the risk of mishaps occurring. In the second half of the supply chain risk management, you have the creation of backup plans. These plans will detail the steps that will ensure minimal loss occurs even under unideal circumstances.
Let Overflo Help You Avoid Supply Chain Mishaps!
There is no need to fear supply chain risks when you have Overflo here to help you! With our decades of experience in the warehousing and logistics industry, we possess the tools to help you achieve success and avoid the usual mishaps.
We will ensure your products arrive where they need to be safely and on time. Our clients can count on us to ensure their supply chain runs optimally.
If you’re interested in our services, contact us today for a free rate quote!