Five New Supply Chain Risks and Regulations

Posted on by Teddy Nee

Five New Supply Chain Risks and Regulations

Supply chain risk is a major issue, and new sources continue to pop up. Adverse weather, natural disasters and factory fires have historically grabbed the attention of CPOs, but there are other risks procurement leaders must be aware of that are just as hazardous. The world of procurement is constantly changing, and supply chain managers must be on top of their game. Here are 5 new threats that you might not be ready for:

1. Financial Fraud

Financial fraud can come in the form of collusion, poor monitoring of employee expenses, or misconduct from the vendor, including falsified labor and inflated bills. Did you know that less than one-third of executives are utilising data-analytics tools that can detect fraud or vendor waste?

2. Cybersecurity Threats

Many companies have lax procedures in protecting critical data, leaving businesses vulnerable to attacks that could harm customers, operational processes and brands. Even if you have security measures in place, the suppliers you work with may not.

3. Supply Chain Management Regulations

New rules and regulations continue to pop up in the supply chain, and companies need to be ready to disclose information about their sourcing and supply chain practices. For example, the Transparency on Trafficking and Slavery Act requires companies to file annual reports with the SEC, disclosing efforts to address specific human rights risks in the supply chain.

4. The Talent Gap

Baby boomers are retiring and there are few up and coming procurement gurus to take their place. CPOs are scrambling to find a solution to this problem, as the implications of this issue are likely to last for at least a decade.

5. Rising food costs

Droughts are worsening across the United States, increasing food prices and ultimately raising the cost structure for many firms. Overall food prices are expected to increase by 2.5-3.5 percent this year, with fruit up 3.5-4.5 percent and vegetables up 2-3 percent.

Do you find this topic interesting? Share your opinions below or send us a message for discussion.

Facebook

Twitter

3 ways companies can identify climate risks in supply chains

Posted on by Teddy Nee

3 ways companies can identify climate risks in supply chains

Despite the enormous value at stake, climate risks in supply chains can be hard to see because they are so large. The key to getting it right, according to Acclimatise CEO John Firth, who spoke at the BSR Spring Forum last week, is for managers to address supply chain climate risks in terms of existing stressors — such as procurement costs, on-time delivery, water availability and secure energy and infrastructure.
At the Forum, speakers and participants identified three lenses that can help company managers connect climate change to existing supply chain concerns.

Vulnerable regions

The economic costs of climate-related disasters are rising, in large part because business is consolidating in vulnerable regions in the name of market growth and efficiency. It is projected that by 2070, seven of the 10 largest economic hubs will be in the developing world, and assets exposed to floods will rise from 5 percent to 9 percent of global GDP.

Categories at risk

Sustainability professionals also can address climate risk through global supply or procurement categories that are dependent on stable climatic conditions, such as crops, capital-intensive infrastructure and water-intensive operations.

Sustainability destabilizers

Finally, climate change undermines companies’ ability to address material sustainability issues. Many companies are working to improve economic development in the communities in which they operate, yet climate impacts, especially disasters, can depress job markets for years. Or, while it is typical for companies to commit to reducing greenhouse gas emissions, the lower water runoff associated with droughts can reduce the capacity of hydropower, the most mature source of renewable power

What do you think about this article? Please leave comments if you have any opinions. You may also send us a message. If you enjoyed reading this website, remember to subscribe.

Facebook

Twitter

Sharpening strategic risk management

Posted on by Teddy Nee

Sharpening strategic risk management

While conventional enterprise risk management (ERM) techniques have done a reasonable job in identifying and mitigating financial and operational risks, research shows that it is the management of strategic risk factors that will have the greatest impact on your ability to realise your strategic objectives. Bringing ERM into the forefront of strategic decision making and execution could thus give your business a decisive edge.

Strategic risks can be defined as the uncertainties and untapped opportunities embedded in your strategic intent and how well they are executed. As such, they are key matters for the board and impinge on the whole business, rather than just an isolated unit.

Strategic risk management is your organisation’s response to these uncertainties and opportunities. It involves a clear understanding of corporate strategy, the risks in adopting it and the risks in executing it. These risks may be triggered from inside or outside your organisation. Once they are understood, you can develop effective, integrated, strategic risk mitigation.

Far from holding back the business, strategic risk management is about augmenting strategic management and getting the full value from your strategy. In a typical instance, a conventional approach to setting and executing strategy might look at sales growth and service delivery. Rarely does it monitor the risks of a shortfall in demand.

Key questions for the board

How well is my strategy actually defined?

How broad are the risks that we are considering?

What risk scenarios have we considered to test our plans?

Have we mapped our risks to key performance and value measures?

Thank you for reading. If you have any opinions, please leave a comment below or send us a message.

Facebook

Twitter

Risk Management: A Look Back at 2013 and Ahead to 2014

Posted on by Teddy Nee

Risk Management: A Look Back at 2013 and Ahead to 2014

According to Yo Delmar, vice president of MetricStream, 2013 has been witness to extraordinary change. We are living and doing business in an increasingly global, mobile, social and Big Data world, fraught with new risks and complex regulations. As such, individuals and organizations are struggling to keep pace.

In response to greater uncertainty, complexity and volatility throughout 2013, we’ve seen increased convergence and alignment amongst internal teams, including IT, security and the business. As a result, organizations are better poised to provide the context for communicating risks. We’ve also seen the business ecosystem evolve to include geographically diverse vendors and third parties, and as a result, organizations must continue to view these entities as part of the organization itself, and manage them in a more tightly and integrated way.

Growing convergence among IT, security and the business: The landscape of risk and compliance continues to evolve, as organizations are asked to manage their IT risk and compliance activities far beyond that of basic audit and compliance requirements of the past. As new technologies bring their own set of unique risks, there is a growing disconnect among internal audit, security, compliance and the business on what it means to build, manage and lead a truly safe, secure and successful business.

As a result, we are seeing more focused efforts when it comes to getting these groups on the same page by building a common risk language, as well as a discussion framework to enable cross-functional collaboration. Doing so can set the context for communicating risks in a way that drives more effective governance and decision-making across the board of directors, executive management team and each respective business function.

What is your 2014 resolutions? Leave us a comment or send us a message.