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.
Global supply and demand networks introduce distance, cultural and time-zone challenges, creating a need for greater visibility. Moreover, businesses are under constant pressure to cut supply chain costs and improve cycle times while meeting customer expectations. Ongoing mergers and acquisitions create even more complexity as each new division finds itself operating in silos and unable to leverage economies across the organization.
According to a recent report by Lora Cecere, founder and CEO of Supply Chain Insights LLC, two of the top global supply chain business pains for companies are increasing regulations and compliance and decreased clarity on decision-making across global and regional teams. Other major pain points included the ability to effectively use data; product quality and supplier reliability; availability of skilled people to do the job; and risk management.
To manage the opportunities and risks requires three supply chain visibility capabilities: quick access to global supply chain information; proactive supply chain alerts and the ability to manage by exception; and efficient collaboration with global trading partners. This type of visibility is more than tracking and tracing on the transportation leg. It’s following a product concept and subsequent purchase or sales order from design to final delivery, with all the compliance and finance steps along the way.
With easy access to real-time information, a company can monitor performance across the commercialization and purchase order lifecycles, including sourcing, logistics and import and export operations. With this insight, a company can improve its understanding of the impacts of decisions across its supply chain and respond quicker to potential issues. Similarly, supply chain visibility tools can help identify key metrics and create alerts to manage safety stock levels and minimum/maximum inventory levels, for example.
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