Risk Management in a Risky Time March 12, 2009
Posted by Jay Melton in Actionable Intelligence, Supply Chain Visibility, Technology.trackback
You see it everywhere – in the news, on the web, you hear it in the halls – how can we effectively manage risk? Supply Chain Risk is often identified as having the greatest potential to disrupt a company’s top revenue driver. Some studies have said it takes years to overcome a supply chain disruption.
In a recent article in Supply & Demand Chain Executive, some results from an IBM Global Supply Chain Study are discussed. The number one challenge discussed is overwhelming and fragmented data. It discusses a visibility problem and the perception that it can be costly and difficult to fix – which isn’t necessarily the case, but perception is reality for some. There are solutions available to mitigate this visibility issue and provide full end-to-end visibility at a minimal cost as compared to the savings.
The visibility and flexibility to manage risk is the #2 issue in the study and is closely tied in with #1. At the end of the day, the ability to manage risk is very closely tied into the visibility into your supply chain processes. This visibility allows a company to manage exceptions, improve their business processes and avoid supply chain disruptions. It allows you, as Sanjeev Nagrath is quoted as saying in the article, to “…anticipate, rather than react.” Think of the money you can save by anticipating potential disruptions rather than reacting to them.
There is a great quote from John F. Kennedy regarding risk that is very appropriate to managing risk and the perceived high cost – “There are risks and costs to a program of action. But they are far less than the long-range risks and costs of comfortable inaction.” This is very true and points to the heart of the visibility argument – is the ability to manage the long term risk worth today’s cost? Ask any company that has faced a serious supply chain disruption and I think they will definitely say the cost is minimal in comparison to the savings.
