The Art and Science of Proactive Supply Chain Risk Management

February 13, 2015 Posted by Supply Chain Risk Management 0 thoughts on “The Art and Science of Proactive Supply Chain Risk Management”

Author: Jennifer Baljko

Art and Science of Supply Chain Risk ManagementWith January’s goal-setting conversations behind you, you’re probably now taking a hard look at your 2015 game plan. A big question hangs over your head: How you can realistically manage existing and potential risks while running an efficient supply chain operation?

You’re far from alone in questioning this. If the latest Allianz Risk Barometer is any indication of what’s worrying many people, companies will be busy this year finding ways to best protect their companies while optimizing their supply chains. Business interruption and supply chain risks, natural catastrophes, and fire and explosions top the firm’s 2015 list of business risks, and companies, risk managers and corporate insurance experts worldwide will be spending loads of time identifying strategies for handling these issues.

A likely response from many companies will be to manage supply chain risk mitigation and supply chain resilience as altogether different beasts. Internal groups will continue to operate in separate silos without realizing how interdependent their activities are or how significantly their everyday practices impact corporate revenue and profit.

Other companies will encourage risk managers and supply chain executives to work together, at least superficially. They may share high-level information about suppliers, monitor some high-level supply chain disruptions and update their business continuity plans.

While the latter scenario may produce positive results initially, it keeps companies in a relatively reactive position, responding when something occurs and when it’s too late to change course.

I offer a new challenge: for your company to develop a longer-lasting approach that generates greater value, keeps you in control when things go awry and gives you a competitive advantage when executing emergency or business continuity plans. It involves balancing the art and science of proactive risk mitigation with comprehensive supply chain visibility and supply chain mapping, real-time disruption monitoring and automatic operational support when an event occurs.

Embedding Risk Mitigation Into Supply Chain Operations

This isn’t pie-in-the-sky talk. Resilinc sees it happening at companies across the automotive, high tech and pharmaceutical industries.

The secret is that proactively managing and mitigating risks is as much art as it is science. Companies that do this best have figured out where the balance lies between both aspects, and have learned how to integrate them into their operations so they can make better decisions faster.

The art of supply chain risk management may already intuitively reside within your supply chain team. They deal with suppliers all the time, and have a good sense of where trouble spots could possibly emerge, at least among the core, top-tier partners. They also have a knack for recalling and gathering product and part information that could impact near-term manufacturing plans and revenue objectives.

Companies typically experience risk management shortfalls on what we consider the sciences side, namely IT-related sciences. Companies frequently lack a centralized, easy-to-access platform containing multiple-tiers of supplier information. They have no adequate way of visualizing or supply chain mapping their entire end-to-end supply chain down to a company, product or part level, and no reliable way of calculating what the revenue impact will be if a part suddenly becomes unavailable. Moreover, they don’t have the business analytics tools to run thorough “what-if” planning scenarios or define risk thresholds the company can financially endure during a supply chain disruption.

From a best practices standpoint, companies that take an operational approach to risk management and blend the art and science aspects tend to fare better in the face of supply chain crisis and maintain an advantage over competitors who were unable to respond quickly.

We know several companies that are doing this today, and their executives will share some of their key learnings at a full-day event the end of this month.

So as set you 2015 game plan in motion, consider how proactive supply chain risk mitigation could not only be part of the broader solution, but a key part of driving operational excellence.


Are you ready to make your supply chain more responsive to a growing number of potential risks?

Join our panel discussion and learn how executives from Amgen, Cisco Systems and  NetApp have developed proactive risk management and mitigation strategies and made them operational cornerstones.

Register here for the Global Supply Chain Resiliency Council’s 2015 kick-off event.

When: February 25, 2015
5101 Great America Parkway
Santa Clara, CA 95054
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