Operational Risk Assessment in the Logistics, Pharmaceutical & Food supply chains
The big word in the logistics and supply chain “world” is RISK, and a risk assessment being performed, or at least having a mitigation plan in place, is becoming part of many certification requirements, like ISO 9001, and other pending or recently introduced federal regulations.
It will be no surprise, I am sure, when I mention certain facts like – “Where humans are involved in a process there will be errors, and 90% plus of all supply chain errors are human errors”; but how do you avoid these?
There are 4 common and accepted ways that Risk can be managed, or mitigated:
Risk Avoidance: Changes made to your processes and players that ensures risks are no longer an issue.
Risk Mitigation: Reduce the severity of the loss or prevent the likelihood of the risk from occurring.
Risk Acceptance: Avoidance of a potential risk area is not possible or economically feasible, so it is acceptable and will not impact your business.
Risk Deflection: After the risk has been identified and quantified, transfer that risk to the control of another player or partner in the process – maybe add it as a clause to be addressed in a vendor contract.
So how do you establish a Risk Mitigation Plan?
Review and audit your supply chain to assess where risk does, or may exist
Assess what the impact of these risks may be and create a list with the highest probability items at the top to address first
Define your risk mitigation strategies for the highest-level items and work down the list from High to Low
Implement the strategies and document them.
What else should I do, or know?
Even though your Risk Management plan includes good SOP’s and WI’s make sure that people are adequately trained in these disciplines