For manufacturing executives, reassessing third-party risk management is a strategic imperative.
Key takeaways
Mapping and segmenting suppliers can identify critical risks across tiers and dependencies.
Data and continuous monitoring can help manufacturers more effectively mitigate disruptions.
An earlier version of this article was originally published in the Manufacturing Leadership Journal.
The risk landscape for manufacturers is evolving so rapidly that traditional, one-dimensional risk management approaches are becoming obsolete. Manufacturing supply chain disruptions—whether caused by natural disasters, pandemics, cyberattacks or supplier insolvencies—are a primary concern for industry leaders. As supply chains become more complex and interconnected, managing third-party risks has never been more challenging. As a result, many companies need to integrate risk management into everyday enterprise operations, rather than treating it as a standalone, periodic review process.
The renewed focus on nearshoring and reshoring strategies adds further complexity as companies adapt their supply networks to shifting global market and regulatory dynamics. In this environment, relying on outdated third-party risk management processes can expose organizations to hidden vulnerabilities and blind spots across their global supplier base.
For C-suite manufacturing executives, the convergence of these factors underscores the need to revisit and reassess internal third-party risk management processes. This is crucial for unlocking data-driven insights that improve supply chain visibility and make the business more adaptable.
Where to start? Mapping the manufacturing supply chain ecosystem
Updated third-party risk management processes help manufacturers identify, assess and monitor risks across supply chains, improving resilience and business continuity. Disruptions caused by natural disasters, cyberattacks, supplier insolvency or geopolitical shifts are now a primary concern for industry leaders.
Reassessing third-party risk management processes and frameworks begins with a holistic understanding of the company’s supply network. The first step is to map the entire supplier ecosystem, from strategic Tier 1 partners to smaller, potentially overlooked vendors at the edges of the network, through Tier 2, Tier 3, and even Tier 4 suppliers and partners. This mapping should not be a static exercise. Instead, executives should rate each supplier based on its criticality to business continuity, connectivity to internal systems and data, and adherence to safety, quality and regulatory compliance standards.
While this task may seem daunting, advanced technologies enable organizations to map and monitor their supplier ecosystem with unprecedented depth, speed and precision, including understanding downstream supplier dependencies and their impact on operations. Even manufacturers lacking the capacity to build this assessment and monitoring system internally can leverage external advisors to implement technology solutions to manage supply chains and inventory.
Once the ecosystem is mapped, the next steps can support stronger third-party risk management:
- Segmenting and prioritizing suppliers and partners: Segmenting suppliers by risk profile and exposure should consider financial implications, regulatory oversight and operational dependencies. Developing a more comprehensive risk profile for each supplier can help manufacturers identify performance issues, quality concerns and capacity constraints before they cause major disruptions.
- Updating sales and operations planning (S&OP) processes: Embedding supplier risk profiles into the organization’s S&OP processes reinforces risk awareness as a core element of strategic decision making. Manufacturers can also integrate this information with broader enterprise risk management efforts for a more holistic approach to mitigating potential disruption.
- Implementing continuous monitoring and governance: Manufacturers need to assess suppliers beyond the onboarding phase. Risk monitoring must continue throughout the entire lifecycle of the supplier relationship, from initial due diligence to eventual offboarding or vendor retirement. Proactive risk identification and mitigation can strengthen existing supplier relationships and demonstrate a commitment to long-term partnerships.
For effective third-party risk management processes, manufacturers need clear cross-functional ownership structures and defined escalation protocols for addressing issues. IT, compliance, procurement and operations must collaborate to ensure that risk data is integrated, accurate and actionable.
How can data enable real-time visibility?
Data organization and clear data governance are foundational for modernizing third-party risk management processes and achieving real-time supply chain visibility. Advanced technologies can support more effective use of information across the organization.
Dashboards, Internet of Things-enabled devices, sensors and connected equipment all feed critical data into centralized platforms that provide actionable insights across the organization. Advanced analytics and machine learning tools can sift through vast quantities of supplier data to flag anomalies, forecast potential disruptions and recommend proactive mitigation strategies.
Data-driven insights are increasingly becoming essential for companies across all industries. According to a 2025 RSM US LLP report on supply chain issues, most of the 309 executives surveyed said their organizations “already have systems in place to harness data throughout their supply chains.”
On a scale of 1 to 5, respondents reported a surprisingly high level of digital maturity in their supply chains:
- 0% rated their digital maturity at Level 1 (data is gathered ad hoc and manually)
- 3% rated their digital maturity at Level 2 (data is available but inconsistently entered and maintained)
- 28% rated their digital maturity at Level 3 (the company has a big data solution and gathers data from critical inputs)
- 47% rated their digital maturity at Level 4 (data is gathered from every function and automatically analyzed by BI or another data stack)
- 21% rated their digital maturity at Level 5 (enterprise data is unified to a single source of truth)
To remain competitive, manufacturers need to prioritize data architecture and data governance practices. Architectural infrastructure investments, such as cloud-based platforms and integrated data lakes, can support more consistent data sharing and real-time monitoring across functions. High-quality, reliable data is the foundation for these efforts; without it, even the most advanced technology solutions may fail.
Manufacturers should prioritize data quality initiatives, using advanced technologies to identify and resolve discrepancies and ensure that risk signals are based on accurate, current information. This approach can strengthen third-party risk management and enhance overall operational agility.
Looking ahead: Third-party risk management as a strategic imperative
For manufacturing C-suite executives, reassessing third-party risk management is a strategic imperative for building resilient, transparent and responsive supply chains in an era of constant change. By embracing a technology-enabled approach anchored in real-time data, continuous monitoring and cross-functional governance, manufacturers can mitigate risks, identify new opportunities and deliver greater value to customers, partners and other stakeholders.
RSM contributors
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Jake WinquistPrincipal
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