It’s the duel between the Jedi Master (Master Yoda) and the Sith Lord (Darth Sidious) when the Sith Lord tells that Yoda would see the real power of the dark side and Darth Vader would become more powerful than either of them. The Grand Master tells Sidious that maybe he has bestowed excessive faith in both the dark side of the force and his new apprentice (Darth Vader)
In the Procurement Galaxy: At times, hasn’t your faith when not gauged periodically and reaffirmed turned into implicit faith which at some point has failed you even to the extent of being catastrophic? This reaffirmation of your belief by periodic gauging is necessary for risk mitigation. I think you have realized this one. Yes Supplier Risk Management!
Some of the best cost reduction business strategies like Lean Manufacturing, Just-in-time inventory and outsourcing try to optimize your supply chain. But this optimization also creates vulnerability in your supply chain. Stretched at the limit and interlinked at various key points with suppliers it cannot accommodate disruptions. And disruptions are no longer few and far between. Also supplier disruptions can be devastating not only to your supply chain but your overall brand image. Your business operations can be disrupted unexpectedly by the failure of even one key supplier and can cause significant harm to you.
Collating information from internal and external sources, a Supplier Risk Management (SRM) system gives you a well-rounded view of your key suppliers. Giving you the ability to evaluate the heath and performance of a supplier both quantitatively and qualitatively, it allows you to identify, measure and manage the risk and performance of your supply base. In line with your business objectives it lets you optimize price, quality and on-time delivery. In short, SPM helps you mitigate the risk your key suppliers might pose to your enterprise, because in business there is no room for Implicit Faith.
Learn More: Vendor Management Guide