Executive Briefings

Regular Supply Chain Audits Recommended, But Value of Some Assessments May Be Questionable

As a company's supply chain grows, so does its exposure to risk. Experts recommend that companies periodically audit their supply chains to identify vulnerable links, but the value that such audits actually deliver is up for debate, for a variety of reasons.

For one thing, an expanding list of risks means there are more things to audit. Inevitably, at large companies a lot of stuff falls through the cracks - that is, if those companies bother doing meaningful audits at all.

For another, new kinds of risks are cropping up that may escape auditors' notice. Traditional supply-chain risks include demand and supply variability, limits on capacity, and quality issues. But those have been joined in recent years by such considerations as greater customer expectations; ever-increasing global competition; longer and more complex supply chains; increased product variety with shorter lifecycles; and security, political and currency risks.

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For one thing, an expanding list of risks means there are more things to audit. Inevitably, at large companies a lot of stuff falls through the cracks - that is, if those companies bother doing meaningful audits at all.

For another, new kinds of risks are cropping up that may escape auditors' notice. Traditional supply-chain risks include demand and supply variability, limits on capacity, and quality issues. But those have been joined in recent years by such considerations as greater customer expectations; ever-increasing global competition; longer and more complex supply chains; increased product variety with shorter lifecycles; and security, political and currency risks.

Read Full Article