Ted Stank, faculty director of the Global Supply Chain Institute at the University of Tennessee, offers insight into how supply-chain professionals can reduce the risk of crises such as the coronavirus pandemic.
Businesses have long employed the technique of examining their strengths, weaknesses, opportunities and threats (known as a SWOT review). Now they need to apply that exercise to their supply chains, with a particular focus on risk.
Supply-chain risk management has been a concern at least since 9/11. (Prior to that, risk was more a function of finance and actuarial science.) Since that time, supply chains have been buffeted by multiple disruptions, including natural disasters in the form of earthquakes, tsunamis and floods. They have even withstood several pandemics, although none as wide-ranging as COVID-19. As a result, risk management has moved closer to the center of supply-chain managers’ concerns.
With the COVID-19 pandemic affecting nearly every region of the world, supply-chain managers can no longer afford to treat risk as an ancillary process. It will elevate risk to the status of other key functions, alongside supply and demand planning and scheduling. Assessing risk will become a dynamic process on which companies must continuously focus.
To properly assess risk, companies must engage in a thorough mapping of their supply chains. They must have a solid understanding of opportunities for disruption. Only then can they proceed to undertake proper planning for mitigating each occurrence.
Risk should be viewed as a multi-disciplinary concern, but it’s supply-managers who are the likeliest candidates for overseeing it throughout the organization, Stank says. They’re the ones who are held accountable for delivering product on time and on budget. And they’re in the best position to weigh the tradeoffs involved in deciding where product will be manufactured and stored, as part of a total cost analysis.
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