Executive Briefings

Report: Digital Mapping and Risk Assessment Prevent Supply Chain Disruptions

Analyst Insight: The 9th Annual BCI/Zurich Supply Chain Resilience Report categorically said last year that ineffective management of supply chains is leaving organizations open to severe disruptions and large financial negative impacts. The report also states that almost 75 percent of companies have experienced one disruptive event and that many more experienced multiple risk events in 2016. Why? The report concludes that organizations are still not ensuring adequate supply-chain visibility upstream and downstream. - Gregory Schlegel, executive-in-residence, Center for Supply Chain Research, Lehigh University

Report: Digital Mapping and Risk Assessment Prevent Supply Chain Disruptions

With that said, supply-chain risk management evangelists and global manufacturers have a lot more work to do, especially in the area of visibility. We have stressed in all our classrooms, workshops and conferences that visibility is No. 1 on the SCRM road map. Our Four-Stage Supply Chain Maturity/Risk Model states - Visibility first, Predictability second, Resiliency third and Sustainability last. Each one of these stages is about 18 to 24 months in duration. And, the reason we stress Visibility is - what you don’t know can and will hurt you!

What needs to be done by 2020

Our methodology for digitally mapping complex supply chains tends to look like this: First, digitally map all nodes in your supply chain, from suppliers, plants, contractors, warehouses and DCs all the way downstream through your customer base. This can be accomplished manually, if small, and digitally using new software solutions, if complex. Next, connect the nodes and build out paths between the nodes that are indicative of volume, margins, service, etc. Third, identify all existing and potential risks within that supply chain map and plot those risks in their associated areas of the supply-chain map. Finally, assess those risks and superimpose the assessments from one node to another in terms of Red, Yellow and Green lines. This process is continuing, in different forms, with many SCRM exemplars.

Where things are likely to be by 2020

Many more companies with complex, global supply chains are delving into utilizing new computer modeling software to perform the above steps. Even smaller companies are building out their first supply-chain maps, manually, and identifying, assessing and mitigating those risks. With risk-based, color-coded supply-chain maps, organizations can begin the SCRM journey of risk mitigation by changing Red pathways to Yellow and Yellow to Green. However, as the BCI/Zurich report states, there’s a lot more work to be done. Our assumption is that more software companies will come online by 2020 with more robust and comprehensive solutions, especially cost-effective cloud-based solutions, to persuade SMEs to exercise this fundamental SCRM critical-success factor technique. Most of us are visual in nature and respond to visualization, especially when evaluating our global, complex supply chains. Making a gut-feel decision, in our new demand-driven, Internet of Things, fully-connected supply networks, we feel, is putting the organization at risk!

The Outlook: Beyond 2020

With new cloud-based software and methodologies, we expect more robust capabilities to come online, such as “what-if” scenario planning analyses to redesign supply networks. These will be based on possible scenarios, actual risk events and more. They will profile the “bottom line” P&L impacts versus the comprehensive Risk/Rewards for each scenario. Many more companies will identify, assess, mitigate and manage supply-chain risks with these tools and SCRM War Rooms, packed with dashboards and predictive analytics 24/7.

With that said, supply-chain risk management evangelists and global manufacturers have a lot more work to do, especially in the area of visibility. We have stressed in all our classrooms, workshops and conferences that visibility is No. 1 on the SCRM road map. Our Four-Stage Supply Chain Maturity/Risk Model states - Visibility first, Predictability second, Resiliency third and Sustainability last. Each one of these stages is about 18 to 24 months in duration. And, the reason we stress Visibility is - what you don’t know can and will hurt you!

What needs to be done by 2020

Our methodology for digitally mapping complex supply chains tends to look like this: First, digitally map all nodes in your supply chain, from suppliers, plants, contractors, warehouses and DCs all the way downstream through your customer base. This can be accomplished manually, if small, and digitally using new software solutions, if complex. Next, connect the nodes and build out paths between the nodes that are indicative of volume, margins, service, etc. Third, identify all existing and potential risks within that supply chain map and plot those risks in their associated areas of the supply-chain map. Finally, assess those risks and superimpose the assessments from one node to another in terms of Red, Yellow and Green lines. This process is continuing, in different forms, with many SCRM exemplars.

Where things are likely to be by 2020

Many more companies with complex, global supply chains are delving into utilizing new computer modeling software to perform the above steps. Even smaller companies are building out their first supply-chain maps, manually, and identifying, assessing and mitigating those risks. With risk-based, color-coded supply-chain maps, organizations can begin the SCRM journey of risk mitigation by changing Red pathways to Yellow and Yellow to Green. However, as the BCI/Zurich report states, there’s a lot more work to be done. Our assumption is that more software companies will come online by 2020 with more robust and comprehensive solutions, especially cost-effective cloud-based solutions, to persuade SMEs to exercise this fundamental SCRM critical-success factor technique. Most of us are visual in nature and respond to visualization, especially when evaluating our global, complex supply chains. Making a gut-feel decision, in our new demand-driven, Internet of Things, fully-connected supply networks, we feel, is putting the organization at risk!

The Outlook: Beyond 2020

With new cloud-based software and methodologies, we expect more robust capabilities to come online, such as “what-if” scenario planning analyses to redesign supply networks. These will be based on possible scenarios, actual risk events and more. They will profile the “bottom line” P&L impacts versus the comprehensive Risk/Rewards for each scenario. Many more companies will identify, assess, mitigate and manage supply-chain risks with these tools and SCRM War Rooms, packed with dashboards and predictive analytics 24/7.

Report: Digital Mapping and Risk Assessment Prevent Supply Chain Disruptions