Page 24 - Risk Management Bulletin April -June 2021

RMAI BULLETIN APRIL TO JUNE 2021

chain because unknown dangers can impact different threat to your company and helps you focus on
sections of this chain. However, there are a few key strengthening the defense structures in weaker links
steps you can take to track and limit these risks. of your chain.
Measure your carrier's performance. Whether you use Set up regular reviews. Once you've set up a
a common or a contracted company to transport your comprehensive and effective risk management
products to your customers, you must ensure this strategy for your business, ensure there's a governance
carrier consistently performs to a high level. structure in place that analyzes and reflects on relevant
Check individual metrics like transit time, shipping risks to your supply chain.
time, loading and unloading time, number of carrier Ensure this panel includes managers from each section
delays and the average shipping costs. of the chain, from product designers and
manufacturers to shippers, carriers and those in charge
If your delivery company is underperforming in any of
these areas, you may have to change carriers to of last mile logistics. That way, you break down the
increase your profits. If you own a dropshipping risks into their separate sections to be more easily
business or a relatively small company that ships addressed.
individual packages sourced from China or Hong Kong, It's vital to review your risk value index regularly, as
you could also consider adopting ePacket delivery - a the individual score of each risk can change over time.
shipping option offered by third-party logistics Delineate a standard of employee behavior. Try to
providers (3PL) in both regions. define your standards when it comes to your
Using ePacket shipping allows you greater control over employees' behavior. The more respect that each
the shipping process with end-to-end tracking and employee has for your company, the more responsible
streamlined customs. The method is developed and they'll feel for responding actively and effectively to
implemented between China Post and USPS, and it any threats to the international supply chain.
offers a more affordable way to ship goods quickly.
They'll also hold themselves accountable for mistakes
Track revenue loss during unforeseen events. Tracking and report to their line managers if they've
the total amount of revenue your company loses due misdelivered mail or sent the wrong data to the carrier
to one of these unknown and unforeseen dangers can company for shipment.
give you the information you need to develop a more
When you have employees who all hold themselves to
robust risk management framework.
high standards of transparency and accountability,
You should also break down this net total to see how you'll be able to address potential risks quickly.
much money you've lost in each part of the supply Invest in an integrated logistics platform. The best way
chain. This is an effective way to home in on where
to improve your international supply chain connectivity
you can improve overall systemic efficiency.
is to invest in an integrated supply chain management
Adopt a risk index value method. When you're drawing program or software. These online platforms allow
up a new risk management strategy for your company, every stakeholder in your supply chain to access and
you should take each potential risk in turn and assign share information, making the whole process
it a score that reflects the level of danger it poses to transparent from the initial supplier to the paying
your international supply chain. customer.
McKinsey & Co. suggests basing this scoring system on This type of integration decreases response and
three main components: the probability of the risk delivery times. It can also reduce costs and improve
occurring in reality, how prepared your company is to your company's relationship with its customers.
deal with this risk should it arise and the financial When you use accurate metrics to measure carrier
impact on your company if the risk does transpire. performance and assess the risks associated with each
Applying this scoring system to all the risks associated part of the supply chain, you can develop a
with each part of your international supply chain comprehensive and effective risk management
allows you to see which dangers pose the greatest strategy.

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