Any discussion of supply chain strategy these days simply has to include risk management. The question is, are you managing the right risks?
The experience of the past few months will have left an indelible impression of people’s minds, but as we move into a recovery phase are there other issues that must also be addressed?
The thought is prompted by the latest quarterly risk report from AMR Research which found that the top three risks were: supplier product quality failures (31 per cent); commodity price volatility (30 per cent); and intellectual property infringement (30 per cent).
The survey, which focuses on US-based manufacturers and retailers, found that 12 per cent of manufacturers indicated that more than half of their suppliers have experienced disruptions that impacted their ability to serve them.
Using nearshore regions for sourcing/manufacturing has become the fastest growing mitigation strategy with 38 per cent of respondents saying an increase in cost competitiveness was behind this shift.
However, the survey found that the most successful approach to mitigating risk came from effective supplier management according to 23 per cent of respondents. Inventory optimisation (17 per cent) and sales and operations planning tools (17 per cent) followed.
There are clearly some big variations in the risk profiles of different sectors of trade and industry, and these can change with market conditions. Improvements in economic conditions mean that understanding what constitutes the major threat to a particular supply chain at a particular moment is assuming a new importance.
Malory Davies FCILT