Institute for Supply Management® (ISM®) CEO Thomas W. Derry recalled a recent conversation with an executive at a food-production company whose revenues were up 10 percent above pre-coronavirus pandemic levels.
A financial analysis revealed that half of that increase was the result of COVID-19 changing consumers’ habits, as they ate at home more. But the other 5 percent was due to new customers, as the company’s primary competitor suffered from stockouts. “The big question is are those new customers — and that change in market share — permanent?” Derry said.
That’s a chilling thought for the company on the losing end of the exchange, and the impetus behind a different way to measure risk, discussed during a session at the ISM World 2022 Annual Conference in Orlando, Florida, on Monday. “Revenue at Risk: A Value at Risk Metric for Supply Management” was presented by Derry, Dale Rogers, Ph.D., and Thomas Choi, Ph.D. Rogers and Choi are professors at the W. P. Carey School of Business at Arizona State University in Tempe, Arizona.