Risk-management technology is beginning to help manufacturers cope with the supply-chain upheaval caused by the COVID-19 pandemic, said Thomas Derry, CEO of the Institute for Supply Management: “We are a lot better at managing risk than even 10 years ago.”
Software can track the financial health of suppliers and the relevance of disruptive incidents around the globe, he noted.
“Digital twins are emerging to manage supply chain networks, to model and map disruptions, and to understand how to best mitigate disruptions,” Derry said. “These tools are helping companies develop more resiliency.”
Pen-and-paper due diligence is still being used widely, said Dan Hartnett, associate managing director with the Compliance Risk and Diligence practice of Kroll, a division of Duff and Phelps. But it is prone to error and is no longer getting the job done.
“As we go to post COVID-19 recovery, we are pushing for our clients to digitize their supply-chain due diligence so they can do more with less,” he said. “Manual processes are no longer going to gain you efficiency or save you money; just the opposite. Some big manufacturers have large numbers of third-party suppliers. How do they screen and monitor those vendors without an army of compliance officers and other staff?”
With a digital vetting system, “you can track the onboarding, track the due diligence, set up automatic reminders of when and what you need to monitor,” Hartnett said. “A digital system creates efficiencies and cuts back on errors. Should something happen, you have a stronger audit trail.”