Executive Briefings

Being Safe Is Not So Easy

Analyst Insight: There is now a false sense of security in supply chain risk management. Sixty-eight percent of companies believe they are better prepared than five years ago, yet supply chains experience an average of three material disruptions a year, according to Supply Chain Insights. Supply chain preparedness is for standard risk factors, such as financial viability, natural disasters, product quality, globalization and outsourcing. But, what about other risks and the security of supply chain? – Mickey North Rizza, VP Strategic Services, BravoSolution

Being Safe Is Not So Easy

Supply chain risk management has traditionally been about the risks associated with the production, receipt or use of quality goods and services in your supply chain. The word "security" added to the mix brings a whole new dimension – fear that there is a threat to the supply; it will hurt our business, employees, customers and suppliers; and/or that it will impact our economic circumstances. Security implies there is a new level of scrutiny and safety, not just the standard supply chain risk management practice.

Our supply chain security is even more threatened by cyberattacks, regulatory compliance, terrorists, geopolitical concerns, lack of supply visibility beyond tier one suppliers, demand volatility and inadequate visibility across the entire supply chain. Security is what we desire from the risks that threaten our supply chains. Reducing vulnerabilities requires a focused effort.

• We must understand where we are vulnerable. Is it physical, cyber, social, natural disasters, demand, suppliers, compliance or something else that we haven’t even thought about yet? A vulnerability analysis will help us understand what is at risk.

• Knowing our vulnerabilities allows us to plan and thwart the risks. The plan must be integrated into our overall business plan and strategy for our company. Without it we risk exposure that can hurt our brand.

• Executing the plan requires the right resources. We need people with the right skill sets to move us forward; business processes that alert us to current and potential issues; and technology that can model and do what-if analysis, predict outcomes based on multiple scenario planning and give us the opportunity to test and retest our theories so we implement the right strategies and tactics.

• Measuring our results from vulnerabilities to plans to execution will keep us on our toes and open to improvements. Improving our methods will make us more secure in our thinking.

• Benchmarking other organizations across every security and risk known by them and others, and in as many industries as possible, will reduce our false sense of security and complacency.

• Reporting our findings to our organization and keeping our executives apprised of our efforts brings more transparency.

Supply Chain Insights found only 20 percent of companies report material disruptions in their financial reporting. Obviously, reporting the negatives can have adverse effects on shareholder value but so does a false sense of security in supply chain security and risk management.

The Outlook

In 2015, expect to see more security issues across the enterprise and the supply chain. The stakes are higher with more complexity in our world and also with our ability to monitor and solve the vulnerabilities in our supply chains. It is only a matter of time before another business identifies a security breach; how it is resolved, handled and changes to combat vulnerabilities in the future will make shareholders more comfortable.

Supply chain risk management has traditionally been about the risks associated with the production, receipt or use of quality goods and services in your supply chain. The word "security" added to the mix brings a whole new dimension – fear that there is a threat to the supply; it will hurt our business, employees, customers and suppliers; and/or that it will impact our economic circumstances. Security implies there is a new level of scrutiny and safety, not just the standard supply chain risk management practice.

Our supply chain security is even more threatened by cyberattacks, regulatory compliance, terrorists, geopolitical concerns, lack of supply visibility beyond tier one suppliers, demand volatility and inadequate visibility across the entire supply chain. Security is what we desire from the risks that threaten our supply chains. Reducing vulnerabilities requires a focused effort.

• We must understand where we are vulnerable. Is it physical, cyber, social, natural disasters, demand, suppliers, compliance or something else that we haven’t even thought about yet? A vulnerability analysis will help us understand what is at risk.

• Knowing our vulnerabilities allows us to plan and thwart the risks. The plan must be integrated into our overall business plan and strategy for our company. Without it we risk exposure that can hurt our brand.

• Executing the plan requires the right resources. We need people with the right skill sets to move us forward; business processes that alert us to current and potential issues; and technology that can model and do what-if analysis, predict outcomes based on multiple scenario planning and give us the opportunity to test and retest our theories so we implement the right strategies and tactics.

• Measuring our results from vulnerabilities to plans to execution will keep us on our toes and open to improvements. Improving our methods will make us more secure in our thinking.

• Benchmarking other organizations across every security and risk known by them and others, and in as many industries as possible, will reduce our false sense of security and complacency.

• Reporting our findings to our organization and keeping our executives apprised of our efforts brings more transparency.

Supply Chain Insights found only 20 percent of companies report material disruptions in their financial reporting. Obviously, reporting the negatives can have adverse effects on shareholder value but so does a false sense of security in supply chain security and risk management.

The Outlook

In 2015, expect to see more security issues across the enterprise and the supply chain. The stakes are higher with more complexity in our world and also with our ability to monitor and solve the vulnerabilities in our supply chains. It is only a matter of time before another business identifies a security breach; how it is resolved, handled and changes to combat vulnerabilities in the future will make shareholders more comfortable.

Being Safe Is Not So Easy