The Top 5 Mistakes Companies Make In Managing Supply Chain Risk Effectively

Supply chains today are global – even if a company has its manufacturing in-house and on-shore, chances are, their parts or raw materials originate in 10-20 countries around the globe. In the last 15 years, companies have adopted Lean and Just in Time (JIT) practices as well as Build to Order type capabilities in a big way – this means, that globally stretched supply chains are overly optimized to operational parameters like lead times and often have low levels of buffers that would help to withstand disruptions. Business metrics focus heavily on cost reduction and inventory turns – short term incentives tied to these metrics further result in decisions at every level that erode resiliency. Traditional supply chain risk management practices leave vast gaps in resiliency because supply chain risk management is fundamentally different from every day operations management. When companies fail to recognize and appreciate these differences, they fail to manage risk effectively.