The press abounds with horror stories of supply chain disruptions, and with good reason, as each publicly announced disruption reduces company value by 18.5%(*). This impact on shareholder value has prompted new corporate governance law, which requires large organisations to have processes in place to identify and report material risks in their supply chains.
Each year 12% of UK companies report serious supply chain disruptions. It
therefore comes as a surprise that fewer that 20% of supply chain organisations
have tested business continuity plans in place(*). This means that only one
in five of your suppliers are prepared to deal with a major supply disruption!
As organisations have outsourced globally to focus on core competencies, and
seek out technical innovation and low cost resources, large, complex and unstructured
supply networks have been created. Unwittingly organisations have created,
or become part of, supply networks that are increasingly vulnerable.
Supply managers now find themselves responsible for an increasingly large
proportion of the company’s total risk exposure. As outsourcing can
exceed 80% of all the processes required to deliver a product or service,
we believe the primary risks to an organisation’s success will increasingly
come from their network.
The challenge for senior supply chain managers is to recognize the full range
of vulnerabilities they face, and to then mitigate and manage them. Vulnerabilities
can only be managed if the organisation, and the network, has the necessary
supply chain capabilities. These capabilities are far more than good ERP systems
or robust processes, and driven by the competences of the people involved.
However the dynamics of outsourcing and downsizing have reduced and fragmented
the critical capabilities required to thrive and survive in today’s
dynamic business environment.
Core risk, in collaboration with Cornwell consulting; have developed a distinctive
and practical methodology for balancing the necessary vulnerabilities of modern
supply chains with the appropriate type and level of capability. The method
draws on much practical experience, and reflects emerging best practice in
this area.
Why not review your supply network risk management system
with our 'Health Check' tool?