How,can,companies,mitigate,che business, insurance How can companies mitigate chemical supply risks?
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Supply chain risk is a serious issue faced by all stakeholders involved in the global chemical trade. Stakeholders include chemical manufacturers, traders, buyers and sellers of the industry. With stringent policies and volatile prices, there are severe implications in the supply chain. Companies often face delays in product procurement that adversely affects manufacturing and other related activities due to inferior chemical supply management. In the globalized world, companies have a flexible supply of chemicals and raw materials from various markets. But, serious issues arise in the long-distance logistic, causing many hiccups in the process. As a result, there causes a serious impact on product manufacturing and pricing of finished goods which ultimately affect revenue generation for a company. So, companies are looking for ways to mitigate supply chain risks. Here are some tips to minimize that risk: Collaborate with multiple suppliers Reliance on a single sourcing partner is not an excellent idea in this globalized world. Add supplying chain flexibility collaborating with many partners can help companies in addressing these issues. Collaborating with multiple partners not necessarily solve this problem and deliver a smooth product procurement. Companies need to evaluate manufacturers and chemical suppliers before inking an agreement with them. The objective of this evaluation is to see their professionalism, quality of products, partnership commitment, and assess their supply chain to mitigate risk factors. The chief procurement officer of a company should study the vendors before making a decision. Consult with chemical consultants Chemicals are complex materials. Many companies do not fare well in the chemical trade due to lack of knowledge required in this domain. Chemicals are produced in different grades, quality, and purposes despite being a single category. It is on the onus of CPOs to evaluate and audit product based on the requirement of their organizations. There are thousands of chemicals produced in large quantities in countries like China, India, South Korea. The main categories of chemicals are basic, consumer and specialty. However, there is a rising demand for specialty chemicals as they are used in many industrial applications. If CPOs do not possess the proper knowledge of the products and their manufacturers, the supply chain is bound to suffer. The best way to get a smooth supply chain is to consult with chemical consultants in sourcing products from different countries. Most of the consultants are experts in the field of price negotiation, site audit, testing, logistic service, and market research. Further, they provide a database of top chemical distributors, manufacturers, and buyers in the international markets. Consult with a consulting team can help to bring a seamless flow of products to firms. Partners with Big Suppliers for Risk Management Every chemical business signs an agreement with manufacturers to deliver raw materials. These top suppliers provide most of the materials needed to run manufacturing and other operations. However, it is essential to prioritize suppliers assessing their capabilities and quality to minimize risk factors. Small manufacturers are considered less reliable in comparison to large ones to get a seamless supply of products. It is the reason why most of the companies procure 80% of their products from a large vendor instead of focusing on smaller ones. Conclusion Achieving a par excellence chemical procurement is the need for every company. But, most of them fail due to their inability to use effective strategy in making a purchasing decision.
How,can,companies,mitigate,che