The key question is, “Do you really know what are your Corporate Crown Jewels that should be protected”?
Summary
Supply Chain Risk Management (SCRM) is a hot topic in Board Rooms today. Supply chains have been exposed like no other time in history. Your Board is looking for your organization to restore order and minimize supply chain risk. It is a daunting task to know how to deploy your limited resources to get the biggest bang for your buck. The key question is, “Do you really know what are your Corporate Crown Jewels that should be protected”?
There are a multitude of solutions being offered in the marketplace. Some focus on risks associated with geographical related disruptions that could impact the sourcing of products. Others are offering visibility to the current position of moving products potentially impacted by a disruption while other solutions are more strategic considering changes to the overall supply chain network.
These solutions certainly can be helpful but how do you stay in front of geographical, geo-political and commercial risks that are constantly changing? The answer lies in knowing and protecting your most valuable customers, products and channels, your Corporate Jewels.
The Building Blocks for Prioritized Risk Mitigation Actions
Supply Chain disruptions can occur at any part of your end to end supply chain operation. Effective SCRM strategies must support both reactive and proactive actions. Here are the five steps to empower those actions.
1. Have end to end visibility of your global operation by harnessing the transactional data associated with each part of the operation
2. Measure the contribution of every end to end supply chain asset by correlating the impact that it has on your ability to generate profitable performance
3. Obtain reliable measures of supply chain related risks that are relevant to each part of the operation
4. Prioritize the most critical end to end supply chain assets based on their profit contributions and the level of operating risk associated with each asset
5. Prioritize your SCRM resources to focus on protecting the assets that are associated with your most profitable Customers, Products and Channels (your Corporate Crown Jewels!)
Why is this approach sustainable? Often, SCRM strategies can require changes to the business or adding additional operating costs. Using the 5 step approach above provides the ability to justify these actions based on the specific profits contributions that you are protecting.
Case in Point
The University of Tennessee, Knoxville’s, Global Supply Chain Institute (GSCI) along with CSCMP and IHS Markit undertook extensive research with regard to the supply chain operating risks associated with operating in 54 different countries around the world based on the following criteria; the country’s Economy (E), Political stability (P), Infrastructure (I), Competency (C).
The outcome of that research was a study called the EPIC Report.
I am honored to present at the National Council of Supply Chain Management Professionals (CSCMP) Conference in 2021 on building a sustainable Supply Chain Risk Management (SCRM) Program with Dr. Alan Amling. Alan is a Distinguished Fellow at the University of Tennessee, CEO of Thrive and Advance and a well-recognized author for numerous publications including the Wall Street Journal.
We will be providing a Case Study focusing on the risks associated with sourcing products from various vendors around the world. Emphasis will be placed on how to measure the impact of every vendor and their products on the Distributor’s profitable performance. We will also discuss how to pinpoint specific products that require prioritized supply chain risk mitigation strategies.
Not going to CSCMP this year. No Problem… Competitive Insights has been addressing the topic of Supply Chain Risk for over 15 years and published the first article on the subject in DC Velocity.
Summary
The COVID pandemic has put a spotlight on supply chains and the need to protect the viability of the entire operation. It is a daunting task; one that requires a repeatable solution to prioritize limited SCRM resources. For commercial operations, the most sustainable approach is to directly tie this to the ability to protect your Corporate Crown Jewels; the most profitable customers, products and channels.