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Supply Chain Risk Management Goes Global

By  Lance Mercereau  on  6 Feb 2015
  • Supply Chain

Natural disasters, geo-political events and employee fraud are just three of many threats facing organizations today. In 99% of the cases, business leaders respond to these circumstances after the fact. 

In order to be in better control of their own destiny and, in doing so, mitigate unplanned business threats, organizations should take a proactive approach to supply chain risk management.

It’s not all bad news.  There are a number of organizations that have established world-0leading supply chain risk management best practices. They succeed by using data from a range of sources and bringing these together for complete supply chain visibility. 

For manufacturers, with complex supply chains, organizations need to understand not just the direct suppliers they buy from, but also those who indirectly contribute components or services across the extended supply chain, in the remotest parts of the world.

It’s imperative that organizations map their entire supply chain, assessing the reliability of key suppliers and determining secondary suppliers in case a factory, for example, is closed due to a Tsunami or industrial action.

One type of data that is increasingly being used by organizations is geo-location.  This involves placing suppliers on a map so the entire supplier base is visible. This is a starting point to managing business risks. It's also quick and easy. 

Tagging suppliers with other information such credit scores allow procurement and supply chain teams to monitor (in real-time) the financial health of suppliers, informing them when suppliers fall below a certain pre-set ‘safe level’.  The key is adding as much relevant information to the suppliers to paint a complete, contextualized and rich picture of the entire interconnected supply chain.

These are just a few examples of how organizations are understanding the complexities of supply chain risk.  Using the right technology is important in order to have the right business outcomes.

Innovation in Technology and Predictions

Starting in 2015, organizations will use their supply chain data to not just improve operational efficiencies and better mitigate their risk profiles. They will use the data in innovative ways that spur new product and business models. 

A driving force behind this prediction is organizations are increasingly recognizing that they can finally access and use data that was previously out of reach. As a result, by focusing less on rudimental data management, business leaders are developing forward-looking analytical projects to support better decision-making across internal departments and teams.

Later this year, cloud-based services will become the norm in most supply chain organizations in recognition that traditional approaches to data management and analytics haven’t delivered expected business value and results.  You’ll see more self-service tools that empower the business user to be in control of the data they need to make informed decisions; instead of waiting on others such as overstretched IT teams.  In a crisis, there is no time.  Preparation is the name of the game. 

Top Five Technology Focuses

Organizations are investing heavily in exploiting the value of supply chain data. The driving force behind this is the fear of the unknown. In 2015, we expect to see these technologies become an integral part of an organization’s supply chain risk management capabilities:

  • Data preparation is about turning unusable data into meaningful information 
  • Cloud is the fastest and most cost effective way to supply chain risk visibility 
  • Self-service analytics is the ability for business users to visualize and manage information
  • Machine learning (artificial intelligence) automates the analysis of large amounts of data
  • Predictive analytics provides a glimpse into the possible including supply chain risk scenarios

Obtaining visibility of possible supply chain risks is a journey that requires a complete understanding of your organization, its operations and relationships with the wider market.  Technology isn’t the end-all answer, but it will dramatically help you and your colleagues mitigate and manage supply chain risks.