Best Practices in eCommerce Supplier Risk Management.

Posted July 9, 2021

The Covid-19 pandemic has resulted in a very challenging situation in supply chain management. Research finds that the supply chain risk increases due to dependence on external suppliers. However, some eCommerce businesses have been able to successfully wade through the Covid-19 pandemic due to their efficient eCommerce supplier risk management policy.

Here are some of the most powerful ways to mitigate risk associated with product suppliers.

Map your supply chain

It begins with the identification of your nodes, suppliers, “suppliers’ suppliers”, and third-party suppliers as well. A good understanding of the processes involved in the procurement of your goods and services is important. For some industries, even knowing where the raw products required to make your end product are procured from is vital to know and have contingencies in case of disruptions.

Monitor the situation

Monitoring and measuring your situation is a crucial part of efficient eCommerce supplier risk management. It is even critical to closely monitor the communication with suppliers and vendors. Both sides should aim for procurement transparency and collaborate on building strong relationships for long-term mutual success.

Create scenario plans

It is important to be prepared for all types of scenarios. Contingency plans are a must. It is equally important to identify alternate suppliers that you can depend on in crisis times when there is a need to increase the volume within a short time frame. Some vendors have gone so far as setting up in-house production to ensure product availability.

Check your contracts

The need to understand the implications of your contracts cannot be ignored. You must try to understand your organization’s liabilities and responsibilities. The idea is to evaluate your supplier’s preparedness during crisis times and know if and when they may back out of a deal. When such a situation arises, you need to be ready.

Effects of Supply Chain Disruption

There is an urgency to create scenario plans to overcome the challenge of supplier disruptions during a crisis. Public health, price hikes, supplier failures, government regulations, labor shortages, and travel restrictions are some of the other disruptions in supplier chains.

Supply chain disruptions adversely affect material costs, resulting in a cost hike as companies are forced to route materials through different ports.
Slower service or slow cycle times for order fulfillment is another type of supply chain disruption that requires attention.

To counteract these disruptions, organizations must be prepared with eCommerce supplier risk management that involves creating contingency plans. These companies try to find alternate solutions to make sure the supply chain is not disrupted and they can get their hands on the goods as and when they need them.

Supply Chain Risk

Some organizations remain unprepared for a supply chain disruption and do not have access to a system to monitor such issues. Contrarily, there are organizations that have access to a monitoring system, but it takes longer than a week or two to identify the impact on commodities, materials, sites, and products. This is where an efficient Warehouse Management System comes into play and becomes the vital link to decreasing supply chain risk.

How to Thrive in a Crisis

Work from home seems to be the new normal even in supply chain management since the pandemic hit the world. Even after the crisis is over, it is to be expected that most supply chain employees might continue to work from home.

Thriving in a crisis situation requires innovation. An evaluation of markets to keep track of the changing needs of customers is important. Besides, organizations must strengthen relationship with suppliers and take steps toward eCommerce supplier risk management.

Elite OPS has been a leader in Shipping and Logistics for over 25 years. Contact Us to find out how we can help you Save Time and Money on Procurement as a Service, eCommerce Order Fulfillment, and Kitting and Assembly.