Executive Briefings

Many Supply-Chain Risk Analyses Fail to See the Whole Picture

When you read press reports of product recalls and supply chain failures, you shouldn't exactly be surprised. Many companies focus too much on just one aspect of supply chain risk. Typically, this has stemmed from a lack of clear ownership or the fact that people habitually focus on the one supply-chain dimension they best understand. Making matters worse, the credit crisis smashed a big hole in the in-place, risk-management procedures. In the darkest days of the crisis, many corporations faced stark cost-cutting choices. Quite often, they sacrificed risk processes for sake of immediate savings. Supply chain management proved no exception.

This is what is now happening: Businesses aren't quite as aware of supply chain risk as they need to be (whether related to the fiscal health of their key suppliers or even in the way that the crisis impacted those suppliers' quality controls). Many manufacturers, for example, were forced to trim headcount among non-engineering or production staff. As a result, their own risk-management checks and balances suffered along with those of their clients.

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When you read press reports of product recalls and supply chain failures, you shouldn't exactly be surprised. Many companies focus too much on just one aspect of supply chain risk. Typically, this has stemmed from a lack of clear ownership or the fact that people habitually focus on the one supply-chain dimension they best understand. Making matters worse, the credit crisis smashed a big hole in the in-place, risk-management procedures. In the darkest days of the crisis, many corporations faced stark cost-cutting choices. Quite often, they sacrificed risk processes for sake of immediate savings. Supply chain management proved no exception.

This is what is now happening: Businesses aren't quite as aware of supply chain risk as they need to be (whether related to the fiscal health of their key suppliers or even in the way that the crisis impacted those suppliers' quality controls). Many manufacturers, for example, were forced to trim headcount among non-engineering or production staff. As a result, their own risk-management checks and balances suffered along with those of their clients.

Read Full Article