Risk Management Takes Over Supply Chain Operations

News Technology

Risk management across the supply chain has always been a tough game. With Covid still challenging traditional operational models, organisations are looking into ways to deepen their knowledge and build networks on visibility and extended data. We spoke to Harald Nitschinger, Co-Founder & Managing Director at Prewave, a predictive risk intelligence for SCM, Sustainability and Insurance.

‘We were able to send the first warning about the pandemic late December 2019,’ begins Nitschinger when asked if supply chains were prepared for what happened during the last nearly two years. ‘When the lockdown in Italy happened there wasn’t much that could be done as nobody would have that kind of safety stock. It is hard and almost impossible to plan for such an event.

A very sensitive area along the supply chain was communication. What worried most organisations was the inability to predict when manufacturing will start again. According to Nitschinger the area with the biggest vulnerability was supplier-customer communication. Prewave launched a ‘Covid Map’ which showed which suppliers were operating and which were still shutdown.

The database was constructed with information both from suppliers as well as publicly available data. ‘The same way you can mark yourself ‘SAFE’ on Facebook, suppliers were able to mark themselves as ‘ACTIVE’.

Predicting with AI

The conversations move to how technology and AI in particular helps supply chains. Based on predictive tools, organisations can learn about possible problems before they occur. This is done by software that can monitor the Internet about specific events and areas and then analyse disruptive events. A good AI would be able to detect a strike in a major port and alert supply chain managers about possible cargo issues. The management can then evaluate how much of a problem the strike is and if any action is needed. If the port in question is not being used at the moment of the strike or the cargo had already left it, then nothing needs to be done.

Following the Covid crisis supply chains are now more engaged with risk management and want to be able to monitor operations closer. ‘It is hard to say what lessons have been learnt but people are more interested in risk management,’ says Nitschinger. ‘Companies are taking a more targeted approach towards risk management. They increase safety stock, substituting suppliers and moving away from single source suppliers.’

Organisations are not rebuilding their supply chains completely but try to target those areas that are most at risk of being affected by a negative event. This is where technology comes again to map out global events and zones of higher risk.

Automating tasks

Once Covid hit people quickly realised that they cannot rely on manual research as things were happening too quickly. ‘People are not preparing for the next crisis and understand that they need to professionalise their risk management,’ Nitschinger explains.

Automation however is just a part of the whole risk management strategy and organisations need to build a well-developed process. A tool can give information and insights but if the company lacks the needed processes no amount of data could help it.✷

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.