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How to Reduce Supply Chain Risks for SMEs: Practical Tips and Strategies

The success of any small or medium-sized enterprise (SME) is heavily reliant on the efficiency and stability of its supply chain. A well-functioning supply chain can effectively reduce risks, lower costs, and improve the overall viability of an SME.

December 19, 2023

The success of any small or medium-sized enterprise (SME) is heavily reliant on the efficiency and stability of its supply chain. A well-functioning supply chain can effectively reduce risks, lower costs, and improve the overall viability of an SME. Unfortunately, supply chains are inherently subject to various risks that can not only hinder growth but also cripple a business entirely. Identifying and mitigating these risks is crucial to managing a successful SME.

Supply chain risks can emerge from various sources, including natural disasters, geopolitical events, policy changes, supplier or partner failures, cyber threats, and transportation disruptions, to name just a few. To protect against these uncertainties, business owners must develop a comprehensive strategy encompassing every aspect of their supply chain—from sourcing and procurement to logistics and distribution. Through careful planning, execution, and monitoring, companies can reduce the impact of potential disruptions and enjoy the benefits of a streamlined, resilient, and efficient supply chain.

In this blog series, we will explore practical tips and strategies that SMEs can employ to reduce the risks associated with their supply chains substantially. Our goal is to not only help you identify the sources of potential risks but also provide you with the tools and knowledge needed to tackle these risks head-on. Join us in this enlightening journey as we help you develop the skills and expertise necessary to reduce supply chain risks and ensure the long-term success and stability of your SME.

Developing a Robust Risk Management Plan

A risk management plan lays the foundation for identifying, assessing, and mitigating supply chain risks. It enables SMEs to proactively address threats and take appropriate steps to minimise their impact. A well-crafted plan should include the following elements:

1. Risk identification:

Begin by mapping your supply chain and identifying all potential sources of disruptions, ranging from supplier failures to geopolitical events. A thorough risk assessment will provide a clear understanding of every potential vulnerability.

2. Risk prioritisation:

Assess the likelihood and severity of each identified risk, and prioritise them accordingly. This ranking will guide your efforts in dedicating resources to manage and minimise these risks.

3. Response strategy:

Develop and document response strategies for each prioritised risk. These strategies might include contingency plans, alternative sourcing options, or even insurance policies to mitigate potential losses.

4. Monitoring and review:

Continuously monitor your supply chain and review your risk management plan, updating it as necessary in response to changing external factors or business requirements. This ongoing process helps to ensure a resilient and adaptable supply chain.

Diversifying Suppliers and Geographical Locations

Relying too heavily on a single supplier or region exposes your business to significant risk in the event of a disruption. By diversifying your supplier base and sourcing from various geographical locations, you can build resilience into your supply chain, reducing potential bottlenecks and improving overall stability. Consider the following approaches to diversification:

1. Multisource:

Actively engage with multiple suppliers for your key products or components, securing supply from various sources and reducing your dependence on any single partner.

2. Create regional redundancies:

Work with suppliers in different regions to avoid being caught out by localised disruptions, like natural disasters or political unrest.

3. Collaborate with strategic partners:

Forge long-term relationships with partners that provide complementary services, products, or resources. This collaboration diversifies your supply base and strengthens your network, enabling greater responsiveness in times of crisis.

Investing in Technology and Automation

Emerging technologies and automation solutions can help SMEs improve supply chain visibility, traceability, and efficiency. Integrating these tools into your operations allows you to anticipate better and manage supply chain disruptions. Consider the following technologies:

1. Internet of Things (IoT):

IoT-enabled devices, like smart sensors, can monitor the status and location of products throughout the supply chain, providing real-time data and enabling more informed decision-making.

2. Blockchain:

Blockchain technology offers a secure and transparent way to track and record transactions throughout the supply chain. You increase trust, traceability, and accountability by providing all stakeholders access to this information.

3. Supply chain analytics:

Advanced analytics tools enable businesses to gather insights from supply chain data, uncovering patterns, trends, and potential inefficiencies that can be addressed before they become critical issues.

4. Automation:

Automating manual processes, such as inventory management or order processing, not only enhances efficiency but also helps reduce the risk of human errors, leading to more dependable and streamlined operations.

Building Strong Relationships with Suppliers and Partners

Collaboration and communication are crucial in managing supply chain risks effectively. Building strong relationships with your suppliers and logistics partners ensures better coordination and cooperation in times of crisis. To foster these relationships, consider the following:

1. Engage in open and regular communication:

Establishing a clear line of communication with your partners enables better issue resolution and faster implementation of contingency plans.

2. Establish shared goals and KPIs:

Collaboratively set objectives and performance indicators, focusing on mutual growth and supply chain optimisation.

3. Implement supplier development programs:

Help your suppliers improve their capabilities and processes, which, in turn, benefits your supply chain by enhancing quality, speed, and reliability.

Enhancing Cyber-security Measures for Your Supply Chain

The growing dependency on digital platforms and connected systems has significantly increased the threat of cyber-attacks on supply chains. Protecting your business against these digital vulnerabilities requires diligent and proactive cyber-security measures, including:

1. Employee training and awareness:

Ensure all staff members are trained in cyber-security best practices and are aware of potential threats, such as phishing scams or malware attacks.

2. Regular security audits:

Periodically assess your supply chain systems and digital processes for vulnerabilities, taking immediate steps to address any identified weaknesses.

3. Update and patch software:

Keep all software used throughout your supply chain up-to-date, including security patches that protect against recently discovered threats.


Reducing supply chain risks is essential to the success and stability of your SME. You can build a resilient, efficient, and responsive supply chain by employing a combination of risk management plans, diversified suppliers, technological advancements, strong partner relationships, and enhanced cyber-security measures. Embrace these strategies better to navigate the complexities of the modern business landscape and unlock the full potential of your enterprise.

Epic Sourcing is an Australian-based sourcing agency helping small- and medium-sized businesses in Australia import products from China and other countries in Asia. If you need assistance with supply chain management, allow our experts to help. Get in touch with us today to get started.

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