It was no coincidence that CSCMP's recent conference on managing supply chain risk was held in Singapore. Asia has become a global manufacturing hub, and what happens in the region's business sector affects economies worldwide. So we were gratified that the conference, titled "Effective Strategies for Managing Supply Chain Risk: Assuring the Viability of Your Supply Chain," drew an impressive crowd of supply chain professionals who wanted to learn more about how to identify and assess key supply chain risks, and to mitigate disruptions once they occur.
The stellar lineup of speakers included representatives of such internationally renowned brands as Starbucks, Walt Disney, P&G, Hewlett-Packard, Caterpillar, McDonald's, EstÃ©e Lauder, Diageo, and Federal Express. They talked about the array of risks faced by global supply chains today, ranging from natural disasters and new regulations to political upheavals and quality breaches. Some spoke about the need to prioritize the protection of people working in the supply chain, including employees, partners, and customers. Others pointed out that any risk strategy must protect not just assets but also the company image, brand reputation, and service levels. Still others suggested that effective risk management requires understanding which risks have both the highest probability and the greatest financial consequences. Strategic focus, they said, should be placed on developing a risk plan for each of the products in that category.
One of many important takeaways from the presentations was that strategies for avoiding the most important risks and those for mitigating the severity of an event once it has occurred both require continuous review. This is to ensure they are in line with current conditions and to identify whether better approaches may exist.
Another was that effective supply chain risk management requires giving people the resources they need to effectively respond to risk and to develop the expertise to employ those resources. Selected employees must be held accountable for solving risk-related problems, and both suppliers and customers must be engaged in the process. A very important point raised by many presenters was the need to include not just Tier 1 suppliers but also Tier 2 and Tier 3 suppliers in the evaluation of any risk situation. Speakers also recommended diversifying suppliers and production points, and developing detailed supply chain maps showing potential risk exposure and vulnerabilities.
One final takeaway: For any risk mitigation effort to be effective, it must be incorporated into day-to-day supply chain operations. That won't happen, of course, without the understanding and support of company leaders.
Note: My thanks to "guest author" Dr. Tom Speh of Miami University (Ohio), who played an invaluable role in organizing CSCMP's Singapore conference.