In transportation and logistics, we frequently hear that “risk reduction” is a top priority. We agree that this should be a focus for any company, so we were surprised to learn from Logistics Management that many companies are not as actually as proactive as they'd like to be about risk management.
What is that practice? It’s called stress testing. Stress testing is when you conduct simulations of certain scenarios to identify what continues to work in that scenario and what breaks or needs attention. Stress testing is often discussed in our industry as a function of measuring supply chain resilience. We decided to use our expertise to take this same lens and apply it more specifically to intermediaries.
Intermediaries, 3PLs, Freight Brokerages, Managed Transportation Providers,
You should also be taking a proactive approach to risk management. Don’t wait until your top customer decides they are only working with asset-based companies moving forward, thus causing your brokerage to have to scramble to try to make up for that revenue loss.
We know it’s not fun to have to think about worst case scenarios, but you know what’s worse? Being blind-sighted by an unfortunate event and having to figure it out in the moment. Most companies unintentionally wait for disaster to strike and then are forced to put out fires. We are advocates for taking a proactive approach to risk management.
This guide discusses some of the main scenarios that can cause serious bottlenecks and issues for businesses like yours. We created this guide to help you assess your company’s weak spots, identify where contingency planning is necessary, and to provide pro tips for minimizing and mitigating risk.
On the flip side, consider a good problem to have. How will your business and employees manage a sudden spike in customer demand? With stress testing, you would have identified that as soon as business increased past a certain threshold, it would be time to hire additional team members, implement swing scheduling to optimize coverage, or increase incentives for employees to work overtime.
Work smarter now to avoid having to work harder later.
Benefits of Risk Management and Stress Testing:
- Minimize risk for your business and bottom line.
- Save money on reactionary band-aids and limit real stress if and when one of these scenarios arises for your team.
- Find your weak links and make them stronger now so they do not break in times of crisis.
- Identify instances when and where bottlenecks occur or processes break so you can plan ahead accordingly.
- Minimize the time spent “putting out fires.”
- Reduce/eliminate the element of surprise by preparing for worst case scenarios. Preparation for worst case scenarios is an indicator of business maturity. It also provides reassurance for employees and customers that their best interests are in mind in any situation.
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