Understanding New Strategies for Supplier Risk Management

The growing information field related to Supplier Risk Management relates to the highly variable business conditions that people building an inventory face, as well as how fragmented this very broad field has become. It relates to everything from outsourcing to globalization, because stock can come from any source around the world. It might be that a company owns a factory or shop in a foreign country, or it might depend entirely on third party providers.
Making a supplier selection based on a desire to reduce liability can be a challenge, and really depends on having expert advice related to each industry. It might be possible that an overseas location would provide cheaper labor, but that the quality would be inferior. Another variable would be the cost of shipping from a long distance.
The price of oil tends to fluctuate, and virtually all container ships burn oil at a predictable rate. Rising oil prices could eat into profit margins. It is therefore important to estimate potential changes in expenses. Sea shipping also has a small chance of cargo loss, although that possibility is acceptable compared to the more expensive option of aircraft transit.
This is a simple example of risk management. A company has several options when it comes to shipping, with sea traffic still being the cheapest. The airport is much faster and safer, but also more expensive. A large part of supplier management is just basic accounting practices and foresight. Research can easily eliminated the unexpected. Asking someone experienced is also important.
Supplier selection is all about knowing how the other company operates and what their strengths and vulnerabilities tend to be. It is good to know their long term performance history. It is just as important to learn the geopolitical situation of their base of operations. What country they are in can influence continuous supply.
An older company that has performed for customers in the past will likely perform for you. Your inventory will just be one more order serviced by a well greased machine. This is logical. On the other hand, sometimes even the best companies can endure financial hardship. If a great deal of money rides on the success of this arrangement, it pays to do digging and look at their viability.
SRM is at the same time an intuitive and difficult field. Choosing the right supplier follows basic logic, but there might be additional details to consider. It might be in the obscure facts that important considerations lie. A real specialist has been around the block and knows what to look for.