Supply Chain Risks: Big or Small, Plan For Them All

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I suspect that few folks in the supply chain management world would argue with the fact that supply chain management is risky business. The reality is that risk comes in many forms (including anticipated risk, uncontrollable risk and unanticipated risk). It’s constantly changing. And the amount of risk being faced by supply chain professionals has been on the rise for the past 20 years. When we talk risk, we’re not just talking about headline-making tsunamis, floods and earthquakes. We’re talking everyday risks as well. (Some might even argue that risk in daily business activities and decision making can be just as, if not more, impactful than exceptional risk events.) Ensuring success in ‘normal’ operating conditions and when faced with catastrophic supply chain disruptions is why developing risk management strategies should be a top priority. Regardless of the type of risk or where it’s coming from, you need to be prepared. While it may be tempting to try to define specific response plans for every potential risk your supply chain might encounter, that would be difficult to achieve. Instead, it’s really about taking a proactive approach that ensures you are prepared to recognize, assess and respond to any disruption that comes your way. Putting plans, processes, enabling tools and technology in place will help you improve reaction times and decrease the overall impact of any disruption. We wanted to share this infographic that looks not only at the types, drivers and impact of risk but also discusses the competencies needed to react to a disruptive event and the advantages that a focus on risk management can bring your organization.

 

 

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Discussions

Oscar Besares
- April 14, 2015 at 1:30am
Planning for supply chain risk is imperative. However, before any company focuses on trying to minimize risk they have to consider supply chain cost efficiency vs risk reduction. Reducing supply chain risk can be very costly and in order to make a strategic decision there needs to be a cost benefit analysis to determine the possible ROI on risk reduction efforts. The question is, will the benefits of implemented risk minimizing processes outweigh the cost? Ultimately, risk minimizing strategies will be allocated according the each specific business organization and their values. Not being able to quantify this risk and not analyzing a cost benefit analysis will lead to inefficient and costly risk reduction efforts that do more harm financially and do not add value.
Meranda Powers
- April 14, 2015 at 9:21am
Great point Oscar!

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