Thursday 17th Aug 2017 - Logistics & Supply Chain

Getting to grips with risk

In March 2007, 300 supply chain executives from across Europe attended Extended Supply Chain 2007 (ESC2007), an annual conference organised by The Awareness Group in association with AMR Research. All delegates took part in a major survey to discover what their attitudes and practices are related to managing supply chain risk.

These findings were compared with a similar survey undertaken by AMR Research in North America.

First, to assess the level of adoption of SCRM practices, we asked the conference attendees to describe their current overall use of SCRM. Some 28 per cent of firms describe themselves as currently using SCRM (vs 33 per cent in the North American SCRM survey) with 41 per cent of firms planning to implement or evaluate SCRM solutions in 2008.

Next, we asked which categories of risk are perceived to be the largest potential threat to the organisation. It is clear from the responses that directionally, there is similarity to what AMR Research found in their North American survey – that supplier failure and strategic risk rank quite highly, although the data seems to indicate that regulatory risk is perceived as more acute by European respondents.

Perhaps more interesting is the forward thinking view of these companies. In total, 44 per cent of companies see the category of Strategic Risk (defined as misunderstanding demand strategically, or missing a selling season or new product introduction window, for example) as the risk that will increase the most. However, companies in the $5bn-$9.9bn category see supplier failure as the biggest issue.

This signifies an evolution in supply chain risk. Companies are expanding their view of how to manage risk beyond applying risk management techniques to procurement and sourcing – they are now focusing on the elements of demand sensing to reduce risk by better understanding demand. The concern over strategic risk and the market impact of shorter product lifecycles and increasingly fickle customers encapsulate this focus. So too does the data showing that the business initiative most driving the focus on SCRM is meeting customer commitments profitably. More at www.esc2007.com.

Jonathan Bennett, is managing director of  The Awareness Group

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