By Antonio McMillan | 06/03/2025
For supply chain managers and logisticians, supply chain risk management involves continuous monitoring. Through daily monitoring, organizations can identify potential disruptions, assess their impact, and implement strategies to ensure supply chain resilience and business continuity.
In addition, it is necessary for anyone managing supply chain risk to maintain a proactive mindset – rather than be simply reactive – against any changes or problems in the larger supply chain ecosystem. There are six critical areas that need to be considered to mitigate internal supply chain risks and external supply chain risks, which are:
- Innovation
- Supply chain disruptions
- Decision-making
- Regulatory compliance
- Customer trust
- Cost efficiency
Innovation
Innovation, such as new technological tools, can be helpful in risk assessment, as well as the causes of supply chain risks and supply chain attacks. For example, companies can utilize predictive analytics to determine where possible disruptions may occur in the supply chain.
Currently, U.S. tariffs have impacted the global economy and supply chains. Consequently, countries and organizations have been forced to become innovative in regard to receiving and shipping raw materials from third-party vendors without increasing the cost to business operations.
When supply chain managers must manage multiple locations, various supply chains, supply chain attacks, and multiple suppliers, all variables – including tariffs – require continuous monitoring. While supply chain disruptions or supply chain attacks may not impact an organization directly, they could impact a third-party vendor or a customer.
Innovation is more important than ever to ensure customers are not disrupted and to keep price points reasonable for growth. When operational costs increase due to supply chain attacks or other problems, the company typically passes those expenses on to customers. The companies that can resolve costs increases for their customers can build a stronger bond with their customer base.
One example of this innovative thinking is Ford®. Automakers around the world have been impacted by auto tariffs, but Ford navigated the tariff challenges by using innovative thinking, according to reporter Charles Singh of USA Today.
Ford created the “From America, For America” campaign. The company offered a special pricing to their customers, enabling those customers to purchase vehicles at the same price offered to Ford’s employees.
This vehicle discount strategy enabled Ford to control its risk management by ensuring a decrease in inventory while decreasing the financial impact of the tariffs on customers. In many cases, consumers received between a $2,000 to $3,000 discount from the manufacturer’s suggested retail price (MSRP), according to Singh.
Supply Chain Disruptions from National Disasters and Other External Factors
During the current U.S. and China retaliatory tariff and trade war, both countries have been impacted. U.S. businesses are experiencing shortfalls in numerous products due to interruptions in manufacturing supply chains. Conversely, China has a surplus of goods that are stored in factories and distribution centers, due to China’s inability to ship products and goods to their largest consumer, the United States.
Over time, this type of trade war creates a domino effect. Employees will need to be let go, shipping times to consumers will increase, and warehouse space will become over-utilized.
The international chain restaurant Wingstop®, however, found a way to handle a supply chain disruption during the COVID-19 pandemic. During the pandemic, Wingstop experienced a shortage of chicken drumettes and wings, according to Julie Littman of Restaurant Dive.
For a restaurant chain like Wingstop, controlling food costs is critical to maintaining operating expenses. Wingstop’s mitigation strategy was to begin advertising and marketing chicken thighs and investigate the use of other suppliers.
Wingstop also foresaw the convenience of easy online ordering for its customers and adopted AI technology to monitor customer trends. As a result, the company experienced growth, especially during the pandemic.
Decision-Making
In today’s business world, supply chains are global and there are many risk factors, such as:
- Environmental risks, including natural disasters
- Planning and control risks
- Supply chain security
- Unethical supply chain practices
- Manufacturing risks
- Supplier risks
Resources are expected to come from various suppliers around the world. That may require supply chain managers to increase the number of suppliers in the event of supply chain disruptions.
Also, technology can be useful in providing data-driven insights through comparisons with sources of historical data. As a result, managers can make better decisions to mitigate risks.
Ideally, a company should categorize their supply chain network based on suppliers’ performance, the quality of their material, and the business relationship. In most cases, the business relationship is not a critical checkpoint for most companies.
However, it is necessary to have a cordial business relationship with suppliers and other stakeholders, because that could impact profits and the company’s mission during supply chain disruptions.
Supplier relationships and scenario planning are essential for a company to become successful, regardless of what industry a company is in. Worst-case scenario drills should be conducted and include all other stakeholders in the case of supply chain disruptions such as a natural disaster, a pandemic, and geopolitical events. This type of test will reveal internal supply chain risks and external supply chain risks throughout a company’s supply chain operations.
Potential supply chain risks should be evaluated, and crisis management plans should be developed. This strategy will enable all involved parties to experience better decision-making and control the risks when fluctuations occur in the supply chain.
Regulatory Compliance
Also, technology can be useful in providing data-driven insights through comparisons with sources of historical data. As a result, managers can make better decisions to mitigate risks.
Ideally, a company should categorize their supply chain network based on suppliers’ performance, the quality of their material, and the business relationship. In most cases, the business relationship is not a critical checkpoint for most companies.
However, it is necessary to have a cordial business relationship with suppliers and other stakeholders, because that could impact profits and the company’s mission during supply chain disruptions.
Perishable foods are one of the largest expenses of grocery retailers. Products must be handled properly and delivered to stores in a timely manner for customer consumption. This strategy avoids waste and ensures food safety.
Refrigeration equipment malfunctions are potential risk factors in managing perishable goods. To mitigate the risk of power outages and equipment failures, we always maintained on-site refrigerated trailers. These trailers were kept fully fueled for maximum operational capacity and provided backup cold storage on the loading docks for temperature-sensitive products.
My organization also implemented a software solution that controlled all refrigerators and freezers in the warehouse. The software continuously monitored temperatures and permitted remote access capability for supply chain managers. When malfunctions occurred, we received instant notifications through the communications technology and could act.
Customer Trust
Effective supply chain risk mitigation offers numerous long-term benefits that can greatly enhance a company’s resilience and help it gain competitive advantage. Supply chain managers typically use various mitigation strategies to improve customer trust.
For example, showing target customers that a company can plan and control risks to deliver products or goods in a reasonable time frame, that attracts new customers and makes existing customers continue to support the business. During my time in the grocery sector, it was imperative that we ensured that families were aware of the quality and safeness of the food they purchased.
It was equally important to have business continuity between supply chain managers in my organization to ensure fresh products on the shelves. My company created a risk-aware culture which educated employees on how perishables were shipped and stocked in grocery retail outlets. The company also stood behind their products 100% by offering customers reasonable solutions if the product was purchased and found to not be fresh later.
Cost Efficiency
In the supply chain, cost efficiency involves minimizing expenses at every level of the supply chain. That ranges from the first level of the sourcing of raw materials to the final level of delivering products to customers. At the same time, product quality cannot be decreased, and delivery times in the entire supply chain should be as short as possible.
Private-sector companies need to constantly analyze cost efficiency and supply risks, especially in companies using global supply chains. In many cases, improving cost efficiency increases profitability and provides an advantage over other businesses.
In my experience, the grocery sector is a competitive sector, and it can be challenging to obtain seasonal food and products. Seasonal fruits and vegetables can be difficult to move through the supply chain, depending upon the region of the supplier and the region of your business.
For instance, the U.S. largely relies on California and Mexico for spring and summer strawberries. Getting strawberries works well for distribution centers located in western regions of the U.S. However, shipping this type of perishable fruit to other areas of the U.S. can cause supply chain issues such as keeping the fruit fresh and unspoiled.
My company decided to source local farmers for the southern and eastern region distribution centers. That decision led to reduced supply times and equated to fresher strawberries for consumers, which increased customer satisfaction.
When companies source locally, that improves warehouse efficiency due to the ability to use minimal warehouse space. Cross-docking – a technique that facilities the direct transfer of stock from arriving trucks to departing trucks – is typically used when companies distribute local products. Using cross-docking minimizes storage time and increases storage space for other products, which is especially useful for high-demand products.
Competitive Advantage
Anticipating business risks and finding various ways to handle challenges is how an organization becomes successful in the business world. Companies such as Amazon® have perfected their mitigating strategies in the global retail supply chain.
As a result, Amazon maintained its operations while experiencing supply chains disruptions due to the COVID-19 pandemic, extreme weather events, and political unrest in various countries. Customers want their purchases delivered timely without disruptions and the company’s issues or concerns are not the same as consumers.
The advantages that Amazon has over its competitors are speed, consistency, and reliability. For a company like Amazon, these qualities improve its relationships with both customers and shareholders.
Supply Chain Management Degrees at American Military University
For adult learners interested in learning about global supply chains, supply chain practices, supply chain attacks, and other aspects of supply chain risk management, American Military University (AMU) offers three degrees:
- An online Associate of Arts in Supply Chain Management
- An online Bachelor of Arts in Supply Chain Management
- An online Master of Arts in Supply Chain Management
Courses for these supply chain management degrees are taught by experienced instructors with a deep knowledge of the supply chain industry. Topics included in these courses include the principles of supply chain management, retail shipping and receiving, and retail transportation. Other courses include macroeconomics, global demand management, and supply chain management, as well transportation management and technology in supply chain management.
All three of these degree programs have received specialty accreditation from the Accreditation Council for Business Schools and Programs (ACBSP®). This accreditation ensures that these degree programs have been thoroughly examined by higher education professionals to ensure high academic quality.
For more information about AMU’s degree offerings, visit our business administration and management degree program page.
Ford is a registered trademark of the Ford Motor Company.
Wingstop is a registered trademark of Wingstop Franchising, LLC.
Amazon is a registered trademark of Amazon.com, Inc.
ACBSP is a registered trademark of the Accreditation Council for Business Schools and Programs.