Wondering how to improve supply chain risk management? You’ve come to the right place. Supply chains are complex ecosystems to navigate. Their impact, both good and bad, ripples through the whole organisation, and it’s this interdependency that makes them extremely vulnerable. What starts as a small supply chain incident can quickly impact the entire network. Without full risk visibility at each stage of the supply chain, it’s impossible to mitigate risks and fully assess the likely consequences of disruptions.
Due to the vast sources of potential risks that can impact supply chains, internal and external risk management plays an integral role in keeping them ticking over. While executives have become pros at detecting internal supply chain risks, external risks are sometimes overlooked. One way executives are plugging the external risk visibility gap is by equipping themselves with strategic media intelligence solutions that analyse external data types and signal when a potential risk is on the horizon.
During this article we’ll walk you through the basics of risk management, types of supply chain risks to be aware of, and how to optimise supply chain risk management with media intelligence.
Risk, in an organizational context, is usually defined as anything that can impact the fulfilment of corporate objectives such as profitability, innovation, productivity and market share – all of which are critical for business survival. Companies must, therefore, have supply chain risk management strategies in place to stop them diverging from their key corporate focus areas.
Supply chain risk management refers to the identification, evaluation and prioritization of risks, as well as the application of resources in order to minimalize, monitor and control the probability of them developing. Supply chain risk management has multiple benefits including:
A large percentage of logistic disruptions occur due to external factors, for example, volatility of suppliers, weather events, political developments, cyber-attacks and more. Internal data types that companies typically monitor, like sales volume or stock availability, do not help professionals predict the arrival of external risks, therefore, only looking inwards at your company puts the organisation in a weak position. This is why executives are increasingly turning to media intelligence to enhance supply chain risk management. Let’s look out how in more depth.
Each day consumers and businesses leave a trail of online breadcrumbs, a litter of digital activity that provides valuable information which assists companies with corporate decision making, such as controlling, managing and mitigating risks.
From supplier acquisitions to customer complaints on social media, insights from digital breadcrumbs sprawled across the web can help businesses stay agile and protected by alerting them of danger signals long before they pose a risk.
The graph below demonstrates common methods used by companies to mitigate risks. The SCM World study from 2014 found one in five supply chain professionals leverage insights from social media monitoring for the purpose of identifying emerging risks. While this figure is relatively low compared to others in the chart, professionals are starting to transform their processes and introduce datasets seldom used before. According to SCM World, the use of social media monitoring for risk management will increase rapidly over the coming years.
So what risks can social media monitoring help identify?
The speed in which information is disseminated across the web has reached new heights since the introduction of social media. Negative conversations, whether they’re true or false, travel fast. Messages become amplified from others engaging in the conversation until the conversation reaches boiling point and turns into a full-blown crisis. It’s this speed and reach that has strong potential to weaken corporate reputation and when customers lose confidence, it’s directly felt on the turnover of the company.
Risks impacting the reputation of an organisation can take many faces and emerge at different stages of the supply chain. For example, this could be down to bad product design, unethical practices of suppliers, lack of customer service or poor protection of customer data. While this means that we have to keep our eye on many signals during supply chain risk management, reputational risks do have the advantage of being easily identifiable – and therefore manageable.
By monitoring trending themes associated with your brand, you can improve vigilance by quickly spotting unusual mentions, for example, words that suggest something is faulty or at threat. Filter the conversation further by selecting trending themes by their sentiment. For supply chain risk mitigation purposes, negative conversations are most important. To ensure you quickly react to risk signals, set up an alert that notifies you when something abnormal occurs like a spike in negative mentions or an increase of conversations in general since this suggests an event you need to be aware of is taking place.
To spark some food for thought, here are the 10 most-watched risks in 2017:
Active monitoring of social media allows companies to anticipate a problem and react before it becomes uncontrollable or develops into a full crisis. Moreover, social media management also plays a key role in both improving and understanding long-term brand damage, for example, has the sentiment of your brand dived for a prolonged period after a crisis? Are there certain countries who have a particularly negative opinion on your company? What trends are associated with your brand – are they positive, how have they changed prior, during and after a crisis? Answers to such questions should be used for corporate decision making, guiding you on the next step to take.
Risks related to regulation:
Regulatory risks can lead to financial penalties, reputational risks and weak links in the supply chain in the case of non-compliance issues. By continuous monitoring online news mentions around regularity topics, businesses can understand the likelihood of future regulatory changes coming into play, giving themselves time to put alternative plans in place and ensure the smooth adoption of regulations with minimal disruption to the supply chain.
Social media is also a critical source of information when it comes to ensuring the compliance of your suppliers, employees and other stakeholders. A brand that’s affiliated with a company who are breaking the law can easily become bogged down in their mess too. Even if the brand didn’t break the rules themselves, audiences may believe they’re endorsing a company that does, purely due to the affiliation they have with the brand causing negative influences for supply chain risk management.
Financial risks are those that directly affect the revenue of an organisation. Two common risks that often occur include the interruption of activity and breaks in the supply chain. A weakened link in the supply chain can be caused by many external factors including natural disasters, market evolutions, the financial health of suppliers, bad anticipation of the demand, obsolete technologies and an increase in costs of raw materials.
Here are the top financial risks companies are concerned with:
It’s interesting to see that back in 2018, only 14% of companies ranked human diseases as a concern for interruption activity. We’ve witnessed first-hand how COVID-19 disrupted almost every industry and I expect this percentage will rise considerably post 2020.
Risks specific to social media:
The emergence of social media has also given rise to new types of risks that are directly related to the public's use of social networks. One example of this is fraud. Over the last few years, numerous cases of social media fraud have come to light, however, the best known is undoubtedly that suffered by Associated Press. In 2013, one of their Twitter accounts was hacked. Messages announcing a double explosion at the White House were published and quickly retweeted by thousands of people. Although the truth in the message was quickly denied by the press organisation, by that point the damage had been done. The index of Dow Jones Industrial Average fell by 150 points in minutes, representing a loss of about $150 billion dollars. This goes to show the importance of not underestimating the damage of fake news and the speedy response needed to minimize the damage.
Since this example, we’ve seen many other cases where companies that have fallen victim to fraud and fake news; many also subsequently saw a drop in their share price as a result.
Another challenge directly associated with the use of social media and supply chain risk management is loss in intellectual property.
The top 1,000 largest companies in the world have invest more than $45 billion a year in corporate intelligence. This practice has a bright future, facilitated in many ways by the growing use of social media and the insightful digital breadcrumbs users leave behind. For example, employees who post a message on Facebook or Twitter about their work may be of interest to competitors who are gathering information on other players in their field. One notable example to mention is that of a security consulting company who was able to predict the bankruptcy of a company based on tweets from employees complaining of budget cuts and the fact that the Vice-President Operations was looking for a new job on LinkedIn. Many businesses are upping the ante using competitive intelligence. While executives understand the importance of stakeholders being careful not to give away too much information since their competitors are listening, controlling this can be easier said than done.
Monitoring external signals By looking outside of your companies walls and monitoring external data available online, executives can sleep well knowing they have covered all areas. From supplier acquisitions to customer complaints on social media, insights from digital breadcrumbs sprawled across the web can help businesses stay agile and protected by alerting them of danger signals long before they pose a risk.
External risks will develop whether you’re tracking them or not, however, keeping an eye on external insights will lessen the chance of them taking hold. Forward-looking companies already include outside insights in their supply chain risk management analysis, but we’re still seeing companies crumble as a result of risks they can avoid and manage simply by monitoring external signals.
Hopefully by now you better understand how media intelligence can help you improve supply chain risk mitigation. Want to discuss what this might look like for your organisation? Fill out the form and we'll be in touch.