Executive Briefings

Supply Chain Risk Management: The New Discipline of Supply Chain Excellence

Analyst Insight: After traveling around the globe for the last three years, talking about supply chain risk management, facilitating workshops, educating companies and developing a graduate level class covering the subject, I'm thoroughly convinced this new concept is becoming the new discipline of supply chain excellence. So much so that APICS, the premier society for Operations Management professionals, has developed a first-of-its-kind certificate in supply chain risk management to help identify, assess, mitigate and manage risk. - Gregory L. Schlegel, Adjunct Professor, Supply Chain Risk Management, Lehigh University, Graduate Program

After facilitating over 15 supply chain risk management (SCRM) workshops, more than 20 conference presentations and in-house education sessions and sitting in on presentations at APICS, CSCMP, IBF, IEGroup, Supply Chain Council and RIMS conferences, just to name a few, where organizations such as IBM, Bayer, Cisco, Caterpillar, J&J, Coca-Cola and many more have discussed their approach to SCRM, I'm very encouraged that supply chain risk has a very exciting future. I say this with conviction because these companies mentioned above, along with  many other early adopters, are embracing concepts such as Enterprise-wide-Risk-Management (ERM), Scenario & Risk Response Planning, they're presently building out Governance, Risk and Compliance  frameworks and developing new supply chain risk groups driven by new positions such as Director of Supply Chain Risk!

Also encouraging are the more frequent research and survey reports coming from the research organizations such as Aberdeen Group, APICS, Gartner, PRTM, now PwC, and white papers from consulting organizations such as Accenture, Deloitte, IBM, KPMG and many others. So what is SCRM looking like so far?

"¢ What's emerging from the classroom - After three years in the classroom, elements covering this topic are terminology, definitions, techniques, tactics, tools, metrics and new governance frameworks. Students are getting a glimpse of the uncertainty, complexity and risk in global supply chains. New cloud-based "heat map" tools are raising awareness regarding risk in company global supply chains. Students are learning fresh tactics and techniques to mitigate and manage those risks. Aspects of theft and counterfeiting are discussed along with business continuity planning elements, and supply chain and IT security are covered as well. One of the keys to success is the new ERM framework. With these concepts in hand, graduate students are identifying, assessing and mitigating risks in their own companies through classroom work projects.

"¢ What's emerging from the field - The exemplars are really moving the concept forward. Companies such as Cisco, Nokia, Ericsson, IBM, Bayer, Coca-Cola, DuPont and many more are developing these frameworks, above, building out SCRM organizations, along with utilizing the new tools, such as end-to-end supply chain heat maps, probabilistic scenario planning to "stress test" their supply chains, appending risks to each scenario and building risk response plans to ensure that the two drivers of SCRM success, preparedness and responsiveness, are covered completely. New standards are coming online via the ISO organization along with innovative tools for supplier risk assessments, risk war room dashboards and new metrics such as value at risk, time to recovery and resiliency indexes. And last but not least, new service organizations, such as NC4, are now collecting, codifying and classifying weather events, threats and risks around the globe and providing those "risks as a service". Many of the exemplars are injecting those risk profiles into their supply chain and S&OP discussions daily.

                                    The Outlook

In 2013, look for heightened focus on the concepts mentioned above:  more conferences and workshops highlighting elements of this new discipline; more articles, research white papers, "field books" and survey reports; more companies embracing the new concepts.  We'll see increased developments regarding standards, terminology, tools, techniques, tactics, key performance indicators, new roles and organizational development.  Plenty on the horizon for this new discipline that will support the 21st Century supply chain maturity model covering visibility, predictability, resiliency and sustainability.


Keywords: supply chain risk management, supply chain management, supply chain maturity model, supplier risk

After facilitating over 15 supply chain risk management (SCRM) workshops, more than 20 conference presentations and in-house education sessions and sitting in on presentations at APICS, CSCMP, IBF, IEGroup, Supply Chain Council and RIMS conferences, just to name a few, where organizations such as IBM, Bayer, Cisco, Caterpillar, J&J, Coca-Cola and many more have discussed their approach to SCRM, I'm very encouraged that supply chain risk has a very exciting future. I say this with conviction because these companies mentioned above, along with  many other early adopters, are embracing concepts such as Enterprise-wide-Risk-Management (ERM), Scenario & Risk Response Planning, they're presently building out Governance, Risk and Compliance  frameworks and developing new supply chain risk groups driven by new positions such as Director of Supply Chain Risk!

Also encouraging are the more frequent research and survey reports coming from the research organizations such as Aberdeen Group, APICS, Gartner, PRTM, now PwC, and white papers from consulting organizations such as Accenture, Deloitte, IBM, KPMG and many others. So what is SCRM looking like so far?

"¢ What's emerging from the classroom - After three years in the classroom, elements covering this topic are terminology, definitions, techniques, tactics, tools, metrics and new governance frameworks. Students are getting a glimpse of the uncertainty, complexity and risk in global supply chains. New cloud-based "heat map" tools are raising awareness regarding risk in company global supply chains. Students are learning fresh tactics and techniques to mitigate and manage those risks. Aspects of theft and counterfeiting are discussed along with business continuity planning elements, and supply chain and IT security are covered as well. One of the keys to success is the new ERM framework. With these concepts in hand, graduate students are identifying, assessing and mitigating risks in their own companies through classroom work projects.

"¢ What's emerging from the field - The exemplars are really moving the concept forward. Companies such as Cisco, Nokia, Ericsson, IBM, Bayer, Coca-Cola, DuPont and many more are developing these frameworks, above, building out SCRM organizations, along with utilizing the new tools, such as end-to-end supply chain heat maps, probabilistic scenario planning to "stress test" their supply chains, appending risks to each scenario and building risk response plans to ensure that the two drivers of SCRM success, preparedness and responsiveness, are covered completely. New standards are coming online via the ISO organization along with innovative tools for supplier risk assessments, risk war room dashboards and new metrics such as value at risk, time to recovery and resiliency indexes. And last but not least, new service organizations, such as NC4, are now collecting, codifying and classifying weather events, threats and risks around the globe and providing those "risks as a service". Many of the exemplars are injecting those risk profiles into their supply chain and S&OP discussions daily.

                                    The Outlook

In 2013, look for heightened focus on the concepts mentioned above:  more conferences and workshops highlighting elements of this new discipline; more articles, research white papers, "field books" and survey reports; more companies embracing the new concepts.  We'll see increased developments regarding standards, terminology, tools, techniques, tactics, key performance indicators, new roles and organizational development.  Plenty on the horizon for this new discipline that will support the 21st Century supply chain maturity model covering visibility, predictability, resiliency and sustainability.


Keywords: supply chain risk management, supply chain management, supply chain maturity model, supplier risk