Third Party Risk Management (TPRM) is on the rise. The more complex the supply chain, the higher the risk to organizations. Challenges ranging from natural disasters to geopolitics, inflation and black swan events make that abundantly clear. Additionally, companies must focus on the environment, social and governance issues (ESG) as well, an area receiving unprecedented focus these days. For companies, then, the challenge is keeping reputational risk at bay. This has amounted to a cautious approach in many cases, such as moving away from just-in-time manufacturing and accepting some redundancy as the cost of a successful supply chain. It also means the integration of tools like Third-Party Risk Management (TPRM) and supplier due diligence tools. Moody’s Analytics recently explored the growing adoption of TPRM and learned what segments of the supply chain are already using it, who’s considering it, and who hasn’t put it under the microscope yet.
The findings include the fact that 69 percent of respondents said they do not have the necessary visibility over their supply chains to avoid reputational harm. Perhaps as a response, the next finding is that 70 percent of respondents are growing their investment in TPRM, while 74 percent rated their third-party TPRM sophistication level as either poor or mediocre. Top reasons for the missing confidence in risk management included lack of data, difficulty evaluating supply chain partners, and the fact that supply chain tasks are often spread wide across departments, rather than centralized. But when companies do put efforts into risk management, four key advantages emerge: Avoidance of reputational damage; improved operational resilience; avoidance of fines; and faster time to supply chain recovery following disruption. TPRM is proving to be worth a look.
Contact OPSdesign Consulting today. Our Supply Chain Consultants, Engineers, Analysts, and Project Managers study your business; identify and compare alternatives (processes, systems, infrastructure, and labor); design highly efficient, flexible, and scalable supply chain operations; and always protect your interests.
