New research published today from AMR Research finds that China poses the most supply chain risks to global companies.

According to AMR, the top three most successful strategies that companies execute in mitigating supply chain risk are performance-based contracts with suppliers or service providers, closer collaborative relations with trading partners, and dual/multi-sourcing strategies and using redundant suppliers.

We’ve certainly seen all of these strategies utilized by the global customers we work with.  In fact, many utilize all of these strategies.  But, what we’ve found is the cornerstone of any successful strategy is the closer collaborative relationship with your trading partners.  The reality is that you can put all the other measures in place, but without a strong relationship, you’re going to be more exposed (again, this isn’t suggesting that all you need is a strong relationship with your partner, just that you are much more exposed without it).  I wrote about this recently in the post “What’s your relationship with your suppliers?”

A strong relationship is built on a win-win.  When supply chain partners are tied to the same goals and objectives and working collaboratively to achieve them, there’s a greater vested interest in the shared outcome.  Thus, as things go astray, and they will, there’s a shared interest in quickly identifying the risk, understanding its impact and collaborating on the appropriate response.

Global supply chains provide significant benefits, but they also bring substantially more supply chain risk management challenges.  Building solid relationships with your key supply chain partners should be the cornerstone of any supply chain risk management strategy.

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Tags: Supply chain risk management
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