Proactive vs. Reactive SCRM: Steps to Effective Risk Management Feat. Z2Data CEO Mohammad Ahmad

Supply chain professionals often discuss risk management, but few fully grasp the critical difference between reactive and proactive strategies. In an interview with Z2Data CEO Mohammad Ahmad, we explore what defines each approach, why a proactive strategy is increasingly desirable in a global supply chain teeming with risks, and how companies can begin laying the groundwork for one.

Proactive SCRM vs. Reactive SCRM: What’s the Difference?

According to Ahmad, the distinction between proactive and reactive supply chain risk management (SCRM) is more nuanced than it seems. Most people view "reactive" SCRM as the act of responding to risks and disruptions after they’ve occurred. Rather than anticipating potential issues and planning ahead, the focus is exclusively on damage control.

However, as Ahmad explains, "That’s more crisis management than risk management. A lot of companies say they have a supply chain risk management program, but what they really have is a point person who reacts to problems as they happen."

While many companies claim to have a supply chain risk program, their practices and protocols are more often built around responding to crises once they’re already in motion. In other words, what many individuals perceive as reactive SCRM is actually just a crisis management system. This could involve scrambling to contact suppliers after an earthquake to assess the impact, or reviewing component documentation to gauge compliance risks only after a raw material has been restricted by new regulations.

Though the push for proactive SCRM didn’t begin with the COVID-19 pandemic, the crisis did accelerate the urgency for companies to adopt a more proactive approach.

So what exactly is proactive risk management? At its core, it involves identifying and mitigating risks before they have a chance to disrupt your supply chain. "The goal is to prevent issues from impacting your supply chain in the first place," says Ahmad. "But that requires having the right framework in place to do the groundwork for you—things like vetting suppliers and understanding potential risks before they cause disruptions."

But a proactive strategy isn’t just about staying ahead of risks, either. It also entails possessing a level of agility to react and adapt quickly when issues do arise.

Signs You’re Overly Reliant on Reactive Risk Management

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“If you constantly feel like you’re firefighting, you’re probably relying too heavily on reactive measures,” says Ahmad. “Disruptions are constant and always rolling in one after the other.”

For many companies, the default response following a disruption is to contact suppliers and rely on relationships to assess the scope of the impact. However, in reactive supply chains, that initial step often becomes the only step—and it’s typically done without a firm strategy or strong sense of direction. “You end up reaching out to suppliers without a clear plan—without knowing exactly who to contact or why,” explains Ahmad. The result? A lot of wasted time chasing leads and obtaining information that may not even be relevant to the disruption at hand. This unfocused, scattershot approach leaves companies struggling to filter out the noise from the kind of actionable insights that can make a meaningful difference to their operational continuity and bottom line. 

What Does Shifting to a Proactive Strategy Look Like?

“It’s not going to be smooth right away,” Ahmad admits. “People think it’s a quick fix, but it’s a process. It’s not a one-time jump—you have to decide what steps to take, in what order, and work through them one by one.”

Determining What Data to Track

The first step is determining what you need to map and what data should be tracked. What are the critical insights your team needs? Looking at past disruptions and vulnerabilities can help guide this process. “You should be considering factors like single points of failure or geographical risks tied to specific manufacturers,” says Ahmad.

Get Leadership Buy In

It’s also critical to know what your leadership team is looking at. If you can’t secure leadership buy-in, your risk management strategy will falter before it even begins. “Tie it back to your company’s goals,” Ahmad advises. “If you can demonstrate how proactive risk management supports company-wide objectives, you’ll have a much higher chance of getting the green light. Remember, from managers to VPs and C-suite executives, each has different priorities. The more your strategy addresses their specific objectives, the more likely you are to gain support.”

Once You’ve Gotten Approval, It’s Time to Dive Into the Specifics

“A strong proactive strategy is all about visibility,” Ahmad emphasizes. “You should be able to assess risks from both a bottom-up component level and a top-down supplier level. You want to understand the risks tied to each component, from its lifecycle to market availability. Equally important is knowing that the supplier producing it is not engaging in practices that could create ethical or regulatory liabilities.”

One of the biggest surprises companies face when transitioning to a proactive approach is the sheer scale of data required to make it work. “Data dependency is huge,” says Ahmad. “You’re not just collecting data—you need to clean it, normalize it, and resolve inconsistencies before you can contextualize it within your supply chain. There’s a lot of work involved.”

At its core, supply chain risk often boils down to a data problem: specifically, the inability to access and organize information and effectively distinguish between what’s relevant and what isn’t.

Not All Proactive Strategies Are Made Equal

Even the most proactive strategies can introduce new challenges when you're aiming for complete resilience. “A lot of times, people assume that once they’ve implemented a proven risk management tool or process, they’re covered,” Ahmad explains. “But even those tools can create blind spots if they’re not integrated across all teams.”

 For example, you might have your strategic sourcing team using an alert tracker to monitor incoming disruptions, and they might be on top of what’s happening with an impending hurricane or geopolitical shift. But if they’re not communicating with the engineering team, who’s selecting components from suppliers that won’t be compliant with new ESG regulations in Europe next year, you’ve got a gap in your risk strategy.

“Many modern proactive risk strategies struggle when it comes to creating a holistic picture of risk,” said Ahmad. “They take elements of risk, break them down and assign them to different teams, and then have those risks managed in silos. But the result is that those gaps in visibility between teams and the data they have results in new vulnerabilities that companies haven’t accounted for.”

Visibility Is Key to Effective Proactive Risk Management

Ultimately, what companies should be striving for is visibility. This includes not just visibility into their suppliers, their manufacturing processes, and the data surrounding their components, but also visibility into the way companies manage and handle that information internally. Visibility is the cornerstone of resilience because it provides the insights necessary to spot potential issues and make informed decisions long before vulnerabilities escalate into full-blown disruptions.

“Visibility offers another key benefit,” explains Ahmad. “It gives you the perspective needed to strategically shape your supply chain for the future. Rather than simply identifying and mitigating risks, visibility allows you to think long-term—how to strengthen your supply chain to be more resilient, less exposed to risk, and better equipped to adapt to market trends and global economic forces. It helps you stay competitive.”

Building Your Risk Management Strategy With Z2Data 

Achieving this level of visibility requires more than just data, though—it demands the right tools and insights to make that data actionable. That’s where Z2Data comes in.

Data You Can Trust

Z2Data helps you build a resilient risk management strategy by providing the visibility you need into your suppliers, components, and manufacturing locations. With data on over one billion parts, 150,000+ suppliers, and 50,000+ sites/locations, Z2Data offers comprehensive insights—from supplier financials to regulatory information. But we don’t just collect this data; we verify and normalize it, too, ensuring it’s trustworthy and comes with all the context you need to fully understand the risks to your supply chain. Whether it's new environmental regulations or an earthquake in Southeast Asia, Z2Data delivers the critical information required to stay ahead of disruptions.

Relevancy You Can Rely On

One of the key advantages of Z2Data is that it doesn’t just give you visibility—it provides relevance to all the data and insights it obtains for customers. Using your BOMs and other key component information, Z2Data builds a personalized profile of your supply chain risk. By utilizing data to cultivate a deeper understanding of its customers’ risks, the platform is able to issue real-time alerts specifically tailored to their supply chain vulnerabilities. 

For example, when you get an update about a typhoon touching down on the other side of the world, you’re not just getting generic warnings—you’re receiving crucial updates about which of your suppliers are in its path and most likely to be impacted. 

If you want to see how Z2Data can help transform your supply chain risk management strategy, request a demo today and experience the power of proactive SCRM in action.