Threats to the supply chain include cost volatility, material shortages, supplier financial issues and failures and natural and manmade disasters. Coordinated goal definition, risk identification, risk analysis, risk management, and monitoring and control of the efficiency of systems and measures make up the key elements. Mar 15, 2010 risk in supply chain management today, many supply chain managers believe that there are multiple risks involved in a supply chain, and yet are often illequipped to handle the same. Deloitte has identified many different risks that both supply chain and logistics directors must understand for effective supply chain management. Arguably visibility of risk with those further down the supply chain. Risk management in the supply chain has become increasingly important as companies both large and small seek to extend their global reach. Buy supply chain risk management for macro risks by chuck munson and read this book on kobos free apps. Policy risks actions and sanctions of governments, shifts. Ive discussed the first two steps in this process previously on this blog, and today id like to focus on the last and most critical part of the risk management process. As part of its efforts to safeguard its global brand, seattle, washingtonbased starbucks coffee co. Through scrm, systems engineers can minimize the risk to systems and their components obtained from sources that are not trusted or identifiable as well. How to address supply chain risk the risk management journey. How to minimise supply chain risks in 2019 supply management.
Having a realtime supply chain risk surveillance system gives your organization the capability to prepare for and respond to actual or anticipated supply chain risks faster. Covid19 is reason to look at your business fresh from each perspective, with a heightened need to make more effective use of data and analytics. There are 2 main types of risk to include in your risk management plan. Supply chain risk management is an integrated subprocess of a companywide risk management process. This includes things like price risk, supply risk, counterparty risk and the regulatory risk thats present throughout the supply chain. How important are supply chain risk management and resiliency. To manage supply chain risk in your company, you will have to develop a process to do three things. Supply chain risk management, however, is not a new concern. Nov 30, 2015 events with a light impact on the supply chain, let us call them microrisks, are often not a strategic issue for a company, but a problem at the operative level. When you look for articles dealing with risk management in the supply chain, most of them are all about the big disruptions.
How important are supply chain risk management and. Supply chain risk management scrm is the coordinated efforts of an organization to help identify, monitor, detect and mitigate threats to supply chain continuity and profitability. A reputable 3pl partner can help you navigate these risks and properly manage your supply chain to achieve success. Cyber attacks top list of risks impacting supply chain. To assess the state of supply chain risk management in industry today, i led a research team at the university of tennessee to survey more than 150 supply chain executives from a wide range of companies, including retailers, manufacturers, and service providers. Supply chain risk management for macro risks pearson cases in supply chain management and analytics kindle edition by munson, chuck. Yet, these are details involved in supply chain management. Some supply chain risks, such as geopolitical risks, arent as relevant. Use features like bookmarks, note taking and highlighting while reading supply chain risk management for macro risks pearson cases in supply chain management and analytics. Risk management is required throughout the full lifecycle of a contract. Supply chain macro risk simulation with an analytic network. Starbucks adds risk management program to help protect its. Supplier social and environmental responsibilities are becoming a larger factor in assessing risk in a supply chain as product safety regulations continue to be proposed and passed into law.
While nearly twothirds of respondents believe their company performs better today on risk management practices than five years ago, they still had 3. Download it once and read it on your kindle device, pc, phones or tablets. Macro risks economic shifts, recession, hike in wages, variation in exchange rates. On the one hand, globalization and digitization have provided many companies with great opportunities for growth and profitability, but on the other, the risk level in the supply chain has increased significantly. May 21, 2014 whole industries and professions, the insurance and actuarial profession, for example, are built on the assessment, calculation and management of risk.
Identifying supply chain risks business queensland. Supply chain risk management for macro risks matthias klumpp and hella abidi introduction in recent years, international competition has pressured european companies to improve quality and reduce the time and costs of product development and manufacturing. The 5 types of supply chain risk supply chain dive. Supply risk is the probability that an inbound supply problem will disrupt a business. Many of the risk factors develop from a pressure to enhance productivity, minimize waste, remove supply chain duplication, and improve bottomline. May 10, 2020 the coffee chain s enterprise risk management initiative identifies macro trends that could interrupt its supply chain and helps it to mitigate those risks.
Supply chain risk management for macro risks informit. Key practices in cyber scrm cyber supply chain risk. Knowing how to anticipate and manage supply chain risks is therefore an important. Aug 08, 2017 this includes things like price risk, supply risk, counterparty risk and the regulatory risk thats present throughout the supply chain. Supply chain risk management benefits the supply chain in the following. Microrisks a new perspective on supply chain risk management. As i later discovered, there are in fact two separate articles, by the same authors, ila manuj and john t. At greenstone, we believe that companies are on an ever maturing supplier management journey.
For supply chain risk identification, there was a time when our primary focus was on physical risks. The supply chain risk term is also used to cover broad issues and narrow topics. Supply chain risk management is aimed at managing risks in complex and dynamic supply and demand networks. Supply risk can also result in quality problems, liability and reputational issues. Scrms supply chain risk surveillance leverages information obtained during risk management program development by monitoring and validating the effectiveness of your. An increasing number of supply chains disruptions over the past couple of years have brought the subject of risk management to the top of many executives priority list. This includes issues with suppliers, shipments and markets that disrupt production, operations, sales andor projects. While the processes support risk management, the risk mitigation plans, which focus on risk reduction for individual risks i. According to gellert, collaboration and showing the commercial value of transparency is not only important for risk management but an excellent means to gain the most resilient supply chain possible while developing a common risk language across business units. The following are illustrative examples of a supply risk. Supply chain risk management for macro risks pearson. Cyber supply chain risks may include insertion of counterfeits, unauthorized production, tampering, theft, insertion of malicious software and hardware, as well as poor manufacturing and development practices in the cyber supply chain. These macro risks increase the importance of supply chain risk management busher et al.
This knowledge summary focuses mainly on risk management in food supply chains. With the right strategy in place to ensure an agile and adaptive supply chain in an increasingly global marketplace, a firm can maintain its. Macro environmental risks have potential effects across the entire supply chain, which include all sorts of economic, environmental, geopolitical and regulatory factors, or those that relate to infrastructure and security of the organization, or any other hazards caused. Apr 26, 2020 moreover, since supply chain risks can impact different functions within an organization, it is important to engage crossfunctional teams early on to make them aware of the supply chain risk management program and to seek their insight on strategic issues that may need to be considered in developing such a program. Cyber supply chain risk management cscrm is the process of identifying, assessing, and mitigating the risks. This new case study focuses on the macro risks associated with relying on global supply chains. Others talk about it as to sources for select products. Supply chain risk management for macro risks ebook by. The pm may document the risk management process in more detail in a program risk process prp a best practice.
Apr 19, 2014 what is supply chain risk management risk probability of occurrence x consequences supply chain risk management scrm is the implementation of strategies to manage both everyday and exceptional risks along the supply chain based on continuous risk assessment with the objective of reducing vulnerability and ensuring continuity. Other risks include medicare fraud, vendor rep conflicts of interest, violation of the cms stark law, and noncompliance with gift laws. Five easy steps to risk management in procurement supply. Covid19s wakeup call for supply chain risk willis towers. To counter supply chain disruptions, bestinclass organizations apply mature operations and risk management practices to reduce their exposure to these risks and maintain a. Wielandwallenburg, 2011 supply chain risk management scrm is the implementation of strategies to manage both everyday and exceptional risks along the supply chain based on continuous risk assessment with the objective of. Supply chain of apple, dell or any other company and then try to visualise the supply chain from sourcing part to the distribution part of the company. Risk identification risks can range from the major a key supplier files for bankruptcy to the less critical a member of the project team moves to a new role. What are the benefits of supply chain risk management. The risk management inherent in a companys supply chain has become a decisive line for its growth, generating a competitive differential.
This report, produced in collaboration with accenture, calls for new models to address supply chain and transport risks. Supply chain risk management the mitre corporation. Every risk needs to be identified, no matter the size. Aug 24, 2014 to assess the state of supply chain risk management in industry today, i led a research team at the university of tennessee to survey more than 150 supply chain executives from a wide range of companies, including retailers, manufacturers, and service providers. Risk management in supply chain linkedin slideshare. Earthquakes, hurricanes, sudden economic crises and events of similar magnitude can cause all kinds of problems for a companys supply chain, like preventing an important supplier from delivering critical parts example. Risk in supply chain management today, many supply chain managers believe that there are multiple risks involved in a supply chain, and yet are often illequipped to handle the same. Different types of risk in your supply chain, and how to. Each node of the supply chain suppliers, plants, warehouses, and transport routesis then assessed in detail exhibit 1. In the supply chain, risks can occur in supplying a product or service to a customer in terms of cost, timely delivery and impact on image.
A typical approach for risk identification is to map out and assess the value chains of all major products. Identification, quantification, mitigation and transfer. Apics invited 9,000 members and customers to participate in a survey to examine the role that supply chain risk management plays at an organization, encompassing both practical supply chain risk strategy and increasing risk management. Risk management strategy should be included in the sourcing strategy, reflecting the overall needs of the organisation. How to recognize and reduce risk cscmps supply chain quarterly. Similar to the risks arising in other supply chains, food supply chains can be universally affected by a number of different factors all at once all resulting in vulnerabilities and potential risks. Risks are entered on a risk register and tracked rigorously on an ongoing basis. A survey on risk management in supply chains of firms in singapore was carried out. The role of supply chain and credentialing because a supply chain team is responsible for onboarding new vendors and managing existing business relationships, the task of vendor credentialing is a natural fit. Supply chain risks macro environment risks have potential effects across the entire supply chain supply demand extended value chain risks originate in upstream and downstream supply chain partners operational risks relate to internal process risks functional risks. Empirical analysis of logistic performance in relation to macro and micro risks dimensions article pdf available in journal of business studies quarterly 91. Aug 11, 2016 ibm sterling supply chain 5,929 views 3.
Mitigating risk across the healthcare supply chain. In their very recent paper they develop a global supply chain framework and a fivestep approach for global supply chain risk management and mitigation. Supply chain risk management scrm is a discipline that addresses the threats and vulnerabilities of commercially acquired information and communications technologies within and used by government information and weapon systems. Supply chain finance is new risk in crisis experts say the economic slowdown could expose weak spots in the arrangements by jean eaglesham, the wall street journal, april 4, 2020 a sleeping risk on the books of u. Managing these risks in a proactive way is a huge challenge when you have thousands and thousands of suppliers connected to the manufacturing of a single hub. Read supply chain risk management for macro risks by chuck munson available from rakuten kobo. Supply chain insights recently conducted a survey with the objective to understand the current and expected future state of supply chain risk management, the biggest drivers of risk, and the impact on supply chain disruptions. Managing risk in the global supply chain longitudes. The nist framework for improving critical infrastructure cybersecurity the framework released in february 2014 was published simultaneously with the companion roadmap for improving critical infrastructure cybersecurity. As a field of research and practice, it has been around for some time.
The auditor typically needs to understand both data and physical security, regulatory requirements, and the vendor code of conduct, among other functions. May 17, 2012 an increasing number of supply chains disruptions over the past couple of years have brought the subject of risk management to the top of many executives priority list. Enterprises entering new markets often need to form new supplier relationships, engage with stateowned entities, and adapt to local laws and culture. Related literature in these fields will be used as a research method for this thesis. Mentzer, with almost the same title, published the same year, 2008, in. It addresses large events including floods, earthquakes, hurricanes, fires, and tornadoes. These risks can include a shortage of raw materials, production plant failures from natural disasters, strikes, or miscommunications within the supply chain. The roadmap identified cyber supply chain risk management cyber scrm as an area for future focus.
Empirical analysis of logistic performance in relation to macro and micro risks dimensions. Despite growing stakeholder pressure, many companies still do not have an understanding of the compliance, potential risks and impacts of their supply chain. A sound supply chain audit requires understanding thirdparty risks, and thats a unique skill set, donatchie says. Rush orders, missing parts, quality defects or machine breakdowns are not always on the risk managers agenda. The coffee chain s enterprise risk management initiative identifies macro trends that could interrupt its supply chain and helps it to mitigate those risks. Dec 02, 2015 scrm supply chain risk management is a relatively new supply chain software and content product category based on combining massive third party datasets, with graphical views into a companys. The macro level risks for the food supply chain are due to natural disasters, diseases like bird flu mentioned earlier, political unrest in the region. A practical approach to supplychain risk management. A quarantine put supply chains risk management strategies to the test as it left manufacturing facilities without workers needed to reach full production, reduced demand for ocean freight and cut air freight capacity. Making the right decisions to strengthen operations performance duration. Risk management in the supply chain supply chain 247. Oct 06, 2014 to manage supply chain risk in your company, you will have to develop a process to do three things.
External risks can be driven by events either upstream or downstream in the supply chain. The complexity involved in a global supply chain requires a greater degree of coordination and the quality of results from risk management is a direct result of having the right people in place. Supply chain risk can be viewed as a 4fold construct. Awareness of supply chain risks has risen considerably as a result of the 2008 financial crisis, the ash cloud in europe or fukushima for instance, and yet many companies still seem. Our latest survey results will give us a current look at the state of risks. For example, insurance companies talk about supply chain risk in terms of assets.
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