What Is Supply Chain Risk Management Software?

The 2020s have seen a marked rise in disruptions along global supply chains. Events like the COVID-19 pandemic, supply shortages, container port backlogs, natural disasters, and asymmetrical warfare have all roiled supply chains over the past half-decade, negatively impacting manufacturers and importers and forcing businesses into damage control. Real estate firm Cushman & Wakefield went so far as to declare the 2020s the “most disruptive decade in supply chain history.” 

Even two years on from the pandemic, major disruptions are still reverberating across supply chains. In a May 2024 survey, the Federal Reserve Bank of New York found that 43 percent of manufacturers were still being hampered by supply chain disruptions. “While much progress has been made, supply chain disruptions remain significant and are restraining business activity for many firms in the region,” the New York Fed explained in a note on the survey. 

To navigate this new era of hazards and vulnerabilities, businesses are increasingly turning to supply chain risk management (SCRM). Supply chain risk management refers to the strategies and practices a business implements to mitigate threats, enhance resilience, and safeguard continuity across its supply chain. The National Institute of Standards and Technology, a federal agency focused on supporting America’s science and engineering industries, defines SCRM as a “systematic process for managing supply chain risk by identifying susceptibilities, vulnerabilities, and threats throughout the supply chain and developing mitigation strategies to combat those threats.”

What Are the Major Risks in Today’s Supply Chains?

Historically, the supply chain risk landscape has been dominated by two primary threats: sudden fluctuations in demand and supplier vulnerabilities. Manufacturers that didn’t accurately predict demand for their products could find themselves grappling with either shortages or surpluses. In the former scenario, businesses would lose out on lucrative sales opportunities because they didn’t have the supply to support swift increases in demand. In the latter, overestimating the demand for their goods led to excess supply and forced companies to sell product at discounted prices. 

Risky suppliers, meanwhile, have been around for as long as economies and marketplaces have existed. When businesses rely on manufacturers and sub-tier vendors to supply them with parts and products, they are taking on all the risks associated with those organizations. These include everything from manufacturing issues and regulatory noncompliance to precarious financials and even legal woes.

In more recent times, however, threats to global supply chains have metastasized. In addition to the issues outlined above, businesses must now navigate risks surrounding cybersecurity, environmental compliance, and extreme weather events (which have increased dramatically this century). A survey published by Gartner in October found that while “supply disruptions” remained the top risk cited by sourcing and procurement leaders, professionals were also concerned about geopolitical conflict, compliance issues, cyberattacks, and poor data quality. 

What Is Supply Chain Risk Management Software?

Effective supply chain risk management relies on enormous amounts of information. In order to execute the “systematic process for managing supply chain risk” outlined by NIST, organizations need to obtain data on a variety of touch points within their supply chain. These include direct and subtier suppliers; manufacturing sites; products, parts, and subassemblies; and compliance statuses. To gather, access, and analyze all this information and develop strategies based on the insights it yields, businesses rely on supply chain risk management software.

SCRM software are platforms that use large databases, research teams, and proprietary technology to help customers identify and mitigate risks along their supply chains. These tools provide businesses with detailed threat assessments, comprehensive portfolios of suppliers, product and component data, and powerful supply chain mapping capabilities. Whatever the tool or functionality, the end goal of supply chain risk management software is always to help firms recognize vulnerabilities and respond accordingly. 

SCRM platform Z2Data, for example, offers customers a wide repertoire of solutions that enable manufacturers to manage their supply chains with maximum visibility and strategic precision. The software tracks electronic components, evaluates risk among suppliers, and issues real-time alerts on product change notifications (among many other capabilities). 

What Are the Major Features of Supply Chain Risk Management Software?

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All effective SCRM software is predicated on what might be perceived as the field’s two central pillars: data and visibility. Almost all of the features offered by these products are forms of either data or visibility, allowing customers to access as much information as possible on their components, parts, and other commodities. In addition, these tools provide organizations with multidimensional views into their supply chains and the myriad vendors that link them together.

Some of the most critical features offered by supply chain risk management software include:

• Supply chain mapping
• Supplier risk analysis
• Real-time alerts
• Detailed compliance information
• Product lead times and pricing
• Event monitoring

SCRM platforms focused on the electronics market often have additional features specific to industries that source electronic components, including automotive, aerospace and defense, medical devices, and telecommunications. These functionalities range from PCN monitoring and bill of materials (BOMs) analysis to obsolescence forecasting. 

What’s the Market Size of the Supply Chain Risk Management Software Industry?

Though still in its early stages, supply chain risk management software already represents a billion-dollar industry. While estimates vary significantly across research firms, consultancy Allied Market Research has valued the industry at approximately $3 billion. Further, the field is positioned to experience substantial growth through the remainder of the decade. Allied Market Research projects that the SCRM software market will grow at nearly 9% annually over the next seven years, reaching a value of $7 billion by 2031. Other estimates foresee even steeper growth for the sector, and there is broad consensus across financial projections that the field is poised to double or even triple its market value in the years to come. 

What Industries Use SCRM Software?

Supply chain risk management tools offer the greatest value to manufacturers and other businesses in industries that rely on complex, multifaceted supply chains with multiple tiers. These include fields like technology, aerospace and defense, automotive, and consumer electronics. 

Research conducted by McKinsey & Company cogently illustrates just how sprawling global supply chains have become for certain industries. According to the consulting firm, the average automotive manufacturer has approximately 250 direct suppliers, and a staggering 18,000 vendors across its entire supply chain. Aerospace companies are nearly as labyrinthine in their sourcing practices, with an average of 200 tier-one manufacturers and 12,000 within their full supplier networks. Sectors like consumer electronics, medical technology, and heavy equipment also depend on hundreds and sometimes thousands of suppliers to manufacture their products. 

Companies in these large, global fields are able to extract significant value from software that allows them to research and compare components; trace parts back to their original manufacturing sites; and carefully monitor any potential disruptions across their expansive supplier networks. 

What Are the Key Benefits of Using Supply Chain Risk Management Software?

The SCRM software field wouldn’t be undergoing such rapid growth if it wasn’t demonstrating value to its manufacturer customer base. The platforms offer an array of benefits that are becoming increasingly vital to effectively navigating today’s value chains and the growing regulatory infrastructure surrounding them. 

• Adhere to Trade and Environmental Regulations

With the rise of laws like the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), the worldwide regulatory landscape is proliferating. SCRM software can help manufacturers understand their compliance obligations, identify any potential regulatory breaches, and gather the data essential to impending reporting requirements. 

• Avoid Risky Entities

Because the technology companies behind SCRM software have built large proprietary databases on manufacturers and supply chains, they have a wide breadth of information on thousands of suppliers across various industries. Many of these tools analyze all this data using sophisticated algorithms and produce risk assessments that customers can draw on to evaluate potential supply chain partners. 

• Respond to Disruptions with Agility and Precision

When a significant supply chain disruption occurs, the research teams behind these platforms are able to utilize their databases and expertise to obtain extensive information on how suppliers and manufacturing sites have been affected. When this critical intelligence is communicated to customers in a timely fashion, businesses are able to enact contingency plans and develop strategic responses in a way that preserves maximum production continuity and minimizes financial losses.

Risk Management Software as Dynamic as Today’s Supply Chains

Though the world’s supply chains are not as tumultuous as they were during the COVID-19 pandemic and its immediate aftermath, they haven’t returned to the stability of their pre-COVID baseline, either. And because of the evolving nature of our world—one grappling with multilateral geopolitical conflict, multiplying climate disasters, and expanding environmental regulations—they probably never will. Manufacturers that want to equip themselves with technology engineered specifically for today’s complex, dynamic risk landscape will find a powerful tool in Z2Data. 

The industry-leading platform offers all the functionalities manufacturers are looking for in an SCRM tool, including supply chain mapping, risk assessments, and compliance management. Plus, Z2Data features the kind of real-time event monitoring and analysis that helps companies maintain agility in the face of disruptions, responding with the confidence and precision required by the 21st century supply chain landscape. 

To learn more about Z2Data and the suite of functionalities that make it among the most comprehensive SCRM platforms on the market today, schedule a free demo with one of our product experts.