In the wake of the current financial crisis, companies are facing unprecedented risks — not only to their own businesses but to those of their supply chains. Canadian companies involved in the global sourcing of supplies are learning the hard way just how much the economic downturn is impacting the suppliers they have relied on for years. Tightened credit streams, volatile commodity prices, fluctuating exchange rates and plummeting demand stemming from negative consumer confidence can all contribute to supply chain disruptions.
Left unchecked, these disruptions can reduce your own company's revenue and market share, increase existing costs as well as create new ones, and threaten your customer satisfaction, brand equity and credibility with stakeholders.
Supply chain risk management (SCRM) can be a vital practice for safeguarding an organization against the pitfalls associated with supplier distress caused by the economic downturn.
The opportunities of SCRM
Supply Chain Risk Management goes beyond the sourcing of suppliers. An effective organization needs to monitor performance of the supply base and assist critical troubled suppliers develop early corrective actions. A sound SCRM framework can bring several direct benefits, including lower direct and indirect costs, higher quality products, improved on-time delivery, and improved controls. There can also be associated indirect benefits to SCRM, including the reduced cost of capital, reduced costs associated with logistics, raw materials and commodity purchases, and integration with your company's sustainable supply chain strategy.
If you haven't given SCRM much thought, perhaps the time has come. This is especially true if you:
How PwC can help
Our SCRM team has a wide range of experience in accounting, operations, supply chain and performance improvement. We can assess your company's existing Supply Chain Risk Management processes, procedures, controls and systems and provide recommendations on how to improve their effectiveness. We can assist with a supplier performance monitoring system (a web-based tool) allowing collaboration with suppliers and the ability to monitor performance proactively. By working with suppliers, your organization will be able to take action early in assessing root causes of supplier issues and offer corrective actions. For high risk suppliers identified, we can also assist with financial and operational recommendations to minimize disruptions and associated costs.
Contact us to see how we can help protect you against supply chain risk issues.
For more information on our services, download this SCRM factsheet.