Today, every company is making spend-based decisions to ensure supply chain resiliency, but is that the right approach? Our experience suggests there is a very different way to look at supply chain resiliency – and a different set of analytics to ensure it. The new analytics are not spend-based. Rather, they are based on revenue impact.
The benefits of the new revenue-impact analytical approach are multi-fold. Using it, companies will have a clearer strategic view of what impacts their total revenue. And they will improve their financial risk assessments, not just for a limited segment of their supply chains but across many tiers of their public and privately-held suppliers. In short, they will develop more resilient, consistently reliable supply chains that can be measured and managed based on a wider range of spend and risk management metrics.
At Resilinc, we have witnessed the first stage of this evolution toward the new methods of supply chain measurement and management.
It’s no surprise that the Japanese earthquake and tsunami were a trigger event for the new analytical approach because they exposed the high tech sector’s vulnerability and spotlighted the supply chain’s weakest links. One of our high-tech clients, for example, took a big hit in the Japanese tsunami’s aftermath a few years ago. The disaster not only negatively impacted the company’s financial results, it also did longer-term damage that was harder to repair. Limited supply chain visibility led to shipment delays and a drop in customer satisfaction, and the inability to accurately quantify risks in the supply chain and determine where best to focus resources resulted in increased costs. This event and the aftermath were a “wake-up call” for our client’s senior executive team.
To protect itself against the potential impact from future disruptions, our client deployed Resilinc SupplyIntel and EventWatch to address supply chain mapping and business continuity planning challenges, support corporate social responsibility initiatives, and provide effective supply chain and financial risk assessment and mitigation.
SupplyIntel provides our client with a complete solution to map global supply chain across multiple tiers, identify critical supply chain dependencies, expose critical vulnerabilities and single points of failure, manage risk mitigation across the organization and optimize resiliency practices throughout the organization. EventWatch provides around-the-clock monitoring and detection of global events that threaten to disrupt supply chains worldwide. Resilinc monitors thousands of global news sources, identifies critical supply chain developments, and then filters, researches and notifies clients regarding potential supply chain threats. This intelligent filtering capability eliminates redundant notifications and reduces time spent on non-supply chain impactful events.
As a result, our client saw results within months of deployment. Among them, the company’s supply chain visibility improved after it was able to map parts, products and sites across its global supply base, and it lowered costs related to planning for and reacting to disruptions. In addition to helping supply chain managers to create and institute best practices companywide, SupplyIntel and EventWatch boosted the overall reliability of the company’s supply chain operations and, in turn, enabled it to serve customers more effectively.
What our client’s experience has shown us is that many other high-tech companies are grappling with the same kinds of issues. And, if the industry buzz about risk management being a top 2014 supply chain issue holds true, we’re likely to see an acceleration of the movement toward the new analytical approach to supply chain management resiliency.
Will you be one of the change-makers influencing how these evolving risk management best practices take shape?
Our new whitepaper, High Tech’s Next Big Supply Chain Undertaking, and our SupplyIntel & EventWatch Solution Brief provide a more detailed discussion regarding the need for new metrics for supply chain resiliency and reliability.