Supplier risk management is defined as the process of predicting and preparing for the probability of variables which may adversely or favorably affect the supply chain. Supplier risk management is not a new concept; however, the type of risk that can affect the supply chain and the way in which these risks are managed and mitigated has evolved significantly. The need for proactive and predictive management strategies is ever present in business today.
We've determined that a best-in-class supplier risk management process consists of four steps and manages risk throughout the lifecycle of a supplier. The four steps include certifying suppliers, monitoring external and internal risk levers, continual and repetitive analysis to determine how programs are affecting the business, and mitigating risk by planning for potential disruptions. These four steps encompass the entire lifecycle of a supplier and the sourcing process.
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