Executive Briefings

Companies Falling Short on Supply Chain Risk Management

According to a survey of 600 manufacturing and retail executives conducted by Deloitte, 71 percent of the executives surveyed view supply chain risk as "an important factor in their companies' strategic decision making, including 20 percent who view it as extremely important." Yet, 42 percent of the executives from large companies said their supply chain risk management programs are only somewhat or not effective.

Simply put, many companies are still falling short on supply chain risk management, and they continue to pay the price.

48 percent of the executives said the frequency of risk events that had negative outcomes has increased over the last three years, while only 21 percent, reported a decrease.

Fifty-three percent of executives said that these events have become more costly over the last three years, with 13 percent who said they had become much more costly. Executives considered margin erosion to be more costly than other types of supply chain risk events, with 54 percent of the respondents citing it as one of their top two issues.

The relatively low use of technology is another issue revealed by the survey. Only 42 percent of the respondents are using supply chain mapping/visualization tools, and even fewer are using predictive modeling, risk sensing data, and business simulation tools. As the report states, "the limited use of such tools may contribute to the challenges associated with risk management strategies, measuring program benefits, establishing effective performance metrics, and supply chain risk governance."

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Simply put, many companies are still falling short on supply chain risk management, and they continue to pay the price.

48 percent of the executives said the frequency of risk events that had negative outcomes has increased over the last three years, while only 21 percent, reported a decrease.

Fifty-three percent of executives said that these events have become more costly over the last three years, with 13 percent who said they had become much more costly. Executives considered margin erosion to be more costly than other types of supply chain risk events, with 54 percent of the respondents citing it as one of their top two issues.

The relatively low use of technology is another issue revealed by the survey. Only 42 percent of the respondents are using supply chain mapping/visualization tools, and even fewer are using predictive modeling, risk sensing data, and business simulation tools. As the report states, "the limited use of such tools may contribute to the challenges associated with risk management strategies, measuring program benefits, establishing effective performance metrics, and supply chain risk governance."

Read Full Article