What Does Supply Chain Risk Management (SCRM) Mean?
Supply Chain Risk Management (SCRM) is a strategic approach to lowering the probability that an organization’s reputation and/or profitability will be harmed by an untrustworthy supply chain component.
Supply chain risk management software platforms can help stakeholders improve supply chain resiliency by using data to identify areas of risk and proactively mitigate them. This type of software platform is often procured as a software-as-a-service (SaaS) cloud app.
The features of an enterprise SCRM platform can help stakeholders:
- Use real-time data and big data analytics to optimize supply chain resources.
- Take advantage of machine learning algorithms to identify and prioritize risk remediation efforts.
- Experiment with graph databases to map dependencies between supplier components.
- Manage third-party risk more effectively by identifying more than one supplier for key purchase items.
- Vet new suppliers by automating the processes required to collect, analyze and manage supplier information.
- Automate communication and smart contract updates with supply chain partners.
- Cross-reference supplier software bill of materials (SBOM).
Techopedia Explains Supply Chain Risk Management (SCRM)
According to the National Institute of Information Technology (NIST), the business priorities that lead an organization to choose one supplier over another are almost the same as those that introduce more risk to the supply chain. This includes choosing a supplier who charges less than other suppliers, seeking out providers known for interoperability and partnering with providers who have the ability to roll out new product features on a frequent basis.
Unlike supplier risk management platforms, which focus narrowly on how a specific provider's known actions could result in undesirable consequences, SCRM platforms factor in the potential perils of unpredictable variables such as poor weather conditions, COVID-19 lockdowns or changes in a country's political or social landscape.
COTs SCRM platforms typically use a scoring system to assess risk. Scores are based on the likelihood that a risk will occur, its potential impact and the organization's ability to deal with it. Some platforms use heat maps to make it easier for stakeholders to understand areas of high risk.
More sophisticated enterprise-level applications may also provide stakeholders with the ability to improve supply chain execution by integrating SCRM workflows with internal enterprise resource planning (ERP) and procurement systems.
Popular SCRM platforms include:
Prewave: This cloud-based, risk intelligence platform is known for using public information to automatically identify risks in automotive supply chains at an early stage.
DHL Resilience360: This SCRM for logistics is known for its features that support supplier mapping, risk assessment, monitoring and incident response.
D&B Supplier Risk Manager™ : This SCRM platform uses Dun & Bradstreet data and big data analytics to provide risk indicators for more than 365 million global businesses.
Supply Chain Risk Management Resources
To help stakeholders in industry and government manage supply chain risk, the National Counterintelligence and Security Center in the United States has begun distributing resources to help government agencies manage supply chain risk.