QBE: Many Risk Factors to Consider When Choosing Suppliers
Location, energy sources and data protection are among some of the risk factors businesses need to consider when selecting a supplier, according to QBE North America, an operating division of global insurer QBE Insurance Group Limited.
The insurer released a new white paper about the risks of supply chain management, focusing on the effects of globalization. Titled “Does Your Supply Chain Harbor Hidden Risks?”, the paper provides an overview of key areas of risk that tend to impact multinational and domestic companies – both the companies themselves, as well as their many suppliers.
Since the 1980s, globalization – the increased interdependence of large multinational and smaller domestic companies on international labor, raw materials, production, warehousing, distribution and commercial sales – has amplified supply chain risk in ways both predictable and surprising.
Moving raw materials and finished products long distances creates an expected increase in risks. Given that the multitude and variety of risks are becoming more predictable, the leadership of multinational and domestic companies can benefit from taking a closer look at how global interdependence affects each link of their supply chain.
“Supply chain risks are legion, especially given the backdrop of globalization. Further, there are any number of elements within each industry that can prove problematic under the right conditions – or, for that matter, under normal conditions,” said Victor Sordillo, QBE senior vice president, Global Risk Solutions.
Sordillo outlines seven vital areas of supply chain management for multinational and domestic organizations to consider, ranging from manufacturing site safety and labor conditions to quality control and cyber security. He closes by examining strategies to address supply chain risks and key insurance coverages to mitigate these risks.
Supplier site conditions should be evaluated, according to the paper, because not only could production stop but the stoppage could affect the reputation of multinational and domestic companies.
Energy sources should also be considered in order to evaluate reliability and alternate sources should an outage occur.
Quality control is another important factor in considering a foreign supplier in order to avoid problems down the road with faulty parts and potentially no legal recourse.
“A proactive response by industry leaders can mitigate many production and distribution risks, and help them prepare judiciously for less-likely risks that may, one day, occur,” he explained.
The QBE white paper includes a supply chain risk assessment checklist useful to companies considering new suppliers.
The whitepaper can be accessed on QBE Solution’s website at: http://qbesolutions.com/manufacturing/?utm_campaign=microsite%20launch&utm_medium=email&utm_source=constant%20contact&utm_content=body%20link
Source: QBE