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Supply Risks - Aim, Focus, Shoot

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So how are we approaching supply risks? 

There are different approaches to establish risk management framework for supply chain.  One can argue that the traditional enterprise wide risk management frameworks, which start with identification of risks can be adapted to Supply.  Having seen both sides of the coin, as a Risk Manager and a Sourcing & Procurement Professional, I would tend to argue for a simple yet effective approach - embed your supply risk management as part of your Category management framework and Sourcing Process.

 

And here's why:

At the core of supply chain risks, particularly on the procurement side, are the resources and services that we procure or manage.  Whether we are talking of risks of direct materials, indirect materials or services, - and these would be across functions, categories and geographies and business - each would have a spend - that's what we aim to manage through our sourcing frameworks.  Why not use the same approach to start grouping the risks of the your spend? 

So when you group categories, based on the global/functional/geographical spread, also consider the risks that each could bring it, and as we drill down to spend analysis, supply market analysis, industry analysis, commodity analysis, sourcing plans and approach, consider the risk of SSC - supply, supplier and compliance at each level. 

Practical approach, but can be very effective. 

But the challenge each faces is to have a mechanism to record, track and trigger risks as they occur. And have the mindset to think risk! Your views pls...

Comments

Good read.

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