CSCMP's Supply Chain Quarterly
October 23, 2018
Forward Thinking

Few companies achieve a high ROI from risk management

A new Accenture study correlates specific management strategies with high returns on investments in supply chain risk management.

Few companies are getting a full return on their investments in supply chain risk management, according to Understanding the Future of Operations: Accenture Global Operations Megatrends Research, a new report from the global consulting and technology firm Accenture. Only 7 percent of the 1,014 executives who participated in an Accenture survey said that their companies are generating returns of more than 100 percent on their supply chain risk management investments. Those that do hit that mark make risk management a priority, centralize responsibility for risk management, and aggressively invest in risk management, particularly by using supply chain visibility and analytics tools.

The survey canvassed senior operations executives at large companies based in Asia Pacific, Europe, and North America about the effectiveness of their supply chain risk management strategies and tactics. Respondents represented the electronics and high tech, consumer goods and services, industrial equipment, retail, communications, energy, chemicals and utility industries.

Despite the lack of financial returns, 76 percent of respondents described supply chain risk management as important or very important. In fact, 25 percent of those surveyed said they plan to increase investments in supply chain risk management by at least 20 percent in the next two years.

The plurality of respondents worry more about the impact of risks associated with technology and costs and pricing on their supply chains than they do about natural disasters. Respondents identified the top three sources of risk as cost and pricing factors (39 percent), information technology (39 percent), and the global economy (37 percent). Despite the widespread and lasting effects of events like the Japanese earthquake and tsunami and the Thai floods, only 17 percent cited natural disasters or unforeseen events in their top three worries.

The study also found that the area of the supply chain most exposed to risk was quality, cited by 45 percent of respondents. Other high-risk areas included planning (39 percent), supply chain skills and talent (38 percent), and sourcing and procurement (37 percent).

In addition to supply chain risk management, Understanding the Future of Operations: Accenture Global Operations Megatrends Research looked at the use of "big data" analytics and operations in emerging markets. The full report is available here.

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