The Chartered Institute of Procurement & Supply (CIPS) has launched a free online tool to support procurement and supply management professionals and those with an interest in buying to develop resilience in their own supply chains.
A CIPS survey in 2016 of 900 professionals revealed a growing awareness that unmitigated risk can have disastrous consequences for companies in terms of revenue and impact on margins.
Of those surveyed, 46% ‘sometimes’ have mitigation strategies in place and yet 52% expected the same level of service from their suppliers in the event of a disruption.
The Risk and Resilience Online Assessment Tool helps procurement professionals to identify where specific risk exists in their supply chains in seven key areas:
- Geographical. Restrictions on commodities or trade tariffs can have devastating effects on supply chains along with environmental concerns and reputational damage.
- Functional. Poorly conceived strategies and poor systems controls can make critical parts of the supply chain high risk.
- Performance. Suppliers may be engaging in bad working practices or failing to provide the right product, at the right time, to the right place.
- Technical. An inadequate level of internal security surrounding IT systems could lead to cyber risk and loss of customer, or partner data and loss of revenue.
- Governmental. Actions from governments could influence the movement of goods, with sanctions and embargoes and could affect reputation if found to be supportive of human rights abuses.
- Ethical. Dents in customer confidence will affect revenue streams and reputation, disaffected workforces can produced delayed, poor-quality goods.
- Legal. Breach of laws and statutes will cause delays and issues in supply chains. Diligence is required to ensure suppliers and contractors are also compliant.
In 2013, CEB research found that 86% of organizations had recently made significant changes to their performance management system, or were planning to. In 2014, a Deloitte survey found that 58% percent of companies surveyed did not think performance management was an effective use of time, and many media outlets jumped on the opportunity to air their grievances.
Finally, the rising wave of discontent seemed to crash in 2015, as a slew of large organizations like GE, Accenture, Netflix, and Adobe all scrapped their age-old annual performance management processes in favor of more continuous feedback systems. And many others followed suit.
But, was it the right move for everyone?
Last summer, I wrote an article on this topic myself, urging business leaders to really consider the implications of following these organizations. The issue, in my opinion, is not that these organizations did something wrong. Rather, the risk is that many leaders misinterpreted these stories to mean that they should abandon performance management altogether.
One thing is clear: the future of performance management in the American workplace is still very much in question.
For more insight into this important topic, I recently sat down with a handful of thought leaders in the performance management space, including Rob Ollander-Krane, Senior Director of Organizational Performance Effectiveness at Gap, Inc., Nigel Adams, Global Chief Talent Officer at Razorfish Global, and Amy Herrbold, Senior Director of Organizational Development at Kellogg. Together, we discussed the future of performance management to understand, from their perspective, why changes to this process are long overdue.
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A recent University of Tennessee-sponsored survey of leading supply chain executives helped quantify the continued apathy surrounding the proper assessment and management of supply chain risk. For starters, the survey found that none of the companies surveyed use third parties to independently assess their risk, 90 percent don’t even quantify the risk themselves, and while 66 percent acknowledged the existence of corporate officers focused on managing legal compliance, none of these same professionals touched the supply chain.
If HR can be directed to manage against the cost of a potential employee discrimination suit, how did global companies get to a place where they still don’t see the wisdom in protecting themselves against a potential supply chain disaster?
The Port of Tianjin, China’s third largest, just blew up. For companies that rely on that port and that didn’t have a crisis playbook in place, the lessons they’re about to learn could be fatal. If you saw the video of the explosion and are even remotely familiar with Chinese industrial accident rates (70,000 lives lost each year) then you know that the Chinese media is under-reporting the story and that “business as usual” at the Port of Tianjin is likely on indefinite hold.
But here’s the rub: if the Longshoremen at the Port of Long Beach decided to strike unexpectedly next week, the business effects for those without contingency plans could be strikingly similar. That’s how tenuous multi-tier supply chains can be.
Supply chain risk management (SCRM) is defined as “the implementation of strategies to manage both everyday and exceptional risks along the supply chain based on continuous risk assessment with the objective of reducing vulnerability and ensuring continuity.” It’s yet another operational discipline that technology has recently enabled to new heights, as the ripple effects of a catastrophic supply chain event are not intuitive. In fact, they’re usually mind-boggling.
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Many high-tech companies have adopted a “right-shoring” strategy for their manufacturing supply chains, an approach that balances factors such as cost, quality and transit time, according to UPS Inc.’s fifth-annual Change in the (Supply) Chain survey.
The survey, conducted for UPS by IDC Manufacturing Insights, polled 516 senior supply chain executives in the high-tech industry in North America, Europe, Asia, the Pacific and Latin America.
Offshoring of manufacturing and assembly operations to countries with low labor costs remains the most common strategy, but a growing number of tech firms said they are “near-shoring” — moving production closer to end markets — to improve service levels, reduce inventory in transit and gain more control over product quality.
Among the survey’s respondents, 45% said their companies use right-shoring strategies, 47% said they offshore and 35% said they near-shore. Near-shoring was up 25 percentage points from 2010.
“High-tech companies are building more flexibility into their shoring strategies and supply chains so they can respond better to demanding market dynamics,” said Dave Roegge, high-tech marketing director at UPS. “They’re thinking more holistically about their strategies to evaluate their transportation costs and the time it takes companies to deliver goods.”
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Map your Extended Supply Chain: Our collective supply chain eyes were opened in 2011 as a result of the earthquake/tsunami in Japan, and then severe flooding in Thailand that decimated key suppliers in the high-tech sector.
Model Your Supply Chain: A relatively small but growing number of companies maintain an active network model of their supply chains that they use for on-going decision-making, from inbound supply flows to what products to make where.
Develop a Talent Strategy: Do you really have a plan for finding and developing supply chain talent? A few leaders do – but not many. A few years ago, Pepsico took a look at this – and wasn’t happy with what it found.
Start Benchmarking: In general, we do far too little benchmarking in the supply chain. I am referring not just to maybe participating in some survey or service that allows you to compare your results (sort of) with those of others, but meeting with companies to see how they do things, and swap and compare ideas and practices.
Review Your Technology Portfolio: Do you know exactly what software you have where? Do you have any “shelfware,” meaning software you paid for but never implemented, either in total or at certain locations?
Paint a Vision for becoming Demand-Driven: In the early 2000s Procter & Gamble came up with the “consumer-driven supply chain” concept, which the then AMR Research morphed into its demand-driven supply networks.
Start Lunch Time Education Meetings: I know a few companies – Campbell Soup used to be one of them and maybe still is – that hold weekly or monthly Friday “brown bag” lunch days focused on education. Could be an internal team member presenting insight into their area of operation.
Read more at Seven Supply Chain Resolutions for 2015
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