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Articles in category: Risk Management
We never used to think that much about risk in supply chains. Those were the days when most manufacturing was domestic or products were purchased from one or two international factories that we monitored closely. But oh, have things changed!
Now risk management is an important function within most supply chain organizations. Global supply chains have become longer, stretching worldwide; and with every stretched link comes the potential for a weak spot and additional risk of failure.
As a result, managing risk of failure in supply chains has become a hot topic. With events like 9-11, the Japanese tsunami, the ...(Read Full Article)
What do companies like Unilever, Johnson & Johnson, Proctor & Gamble, Wilmar International and Mars have in common? They’ve all made public commitments to implement a zero-deforestation policy throughout their supply chains. With several of these announcements happening over the last few months, it’s clear that major corporations are recognizing what’s good for the environment can also be good for the bottom line.
When done right and systematically, sustainability and zero-deforestation policies lead to improved brand image and build stronger business relationships with other organizations and customers.(Read Full Article)
While effective supply chain risk management programmes recognise things don’t always go according to plan, they also aid businesses build a more resilient operation in response.
The risks of supply chain disruptions aren’t limited to first tier suppliers and customers. The ability to access information from every part of the trading network in real-time can help businesses identify and anticipate risks, as well as inform the range of decisions needed to mitigate them. That visibility fuels the approach behind collaborative planning and execution.
Here are three ways to improve risk management across a company and its trading partner ...(Read Full Article)
World-class procurement organizations outperform their peers by striving to providing unique value beyond cost reduction, including becoming a trusted advisor to the business, driving supplier innovation, and focusing on risk management, according to new research from The Hackett Group, Inc.(Read Full Article)
According to The Hackett Group’s research, world-class procurement organizations now operate at nearly 20 percent lower cost as a percentage of spend than typical companies. They also have 27 percent fewer employees.
World-class procurement organizations now generate purchased cost savings equal to more than 9x the cost of procurement, according to The Hackett Group’s research.
I find it ironic that many organizations today look at supply chain risk from a unilateral perspective. The impact of natural disasters have repeatedly raised questions on organizations’ preparedness to tackle supply chain disruptions. Companies today look for geographical presence and spread of their key suppliers to ensure business continuity. But is that all a company should do to mitigate risk?(Read Full Article)
As companies pursue growth in an environment where operations risk is pervasive, and where supply chain risk has become a top priority, a robust risk management capability is key to designing and operating supply chains. A recent Accenture study of senior executives found that the majority believe supply chain risk management is important or very important.(Read Full Article)
Recent research from The Hackett Group claims that procurement’s ability to generate big savings is declining dramatically. Despite what you might think, that’s good news.
It’s not that savings are unimportant. Of course, they’re important, and they always will be. They are a large part of what organizations expect from procurement. But, as every CPO knows, they aren’t the only things procurement can provide.
For example, in manufacturing companies, procurement can identify suppliers who can suggest alternatives to new product designs that can accomplish the design intent more cost effectively.
(Read Full Article)
Every business faces risks - the probability of events occurring - that can or will present challenges to their operations. Risk management is the practice of using processes, methods and tools to identify the level of probability, and then manage the ensuing risks.
In practice, this means identifying in advance what can go wrong in relationships between buyer and supplier. Failing to do this means you will be under-prepared and get some unwelcome surprises.(Read Full Article)
AsiaInspection, a global provider of quality control services for businesses importing from Asia, Africa, Southern Europe, and Latin America, maintains that supply chain managers should pay more attention to risk irrespective of region.
The Hong Kong-based consultancy has just released its 2014 Q2 Barometer, a quarterly synopsis on outsourced manufacturing and quality control indicating that supply chain transparency is far from adequate nearly everywhere in the emerging markets matrix.(Read Full Article)
Welcome to the first article in a five-part series that will focus on how procurement, finance, and other professionals effectively build a “compliance management” checklist that addresses multiple avenues of spend management and the compliance ramifications behind strategic spend categories. The first four articles will highlight the dozen items that should be included in an [...](Read Full Article)
For the Dodd-Frank reporting year 2013 98% of suppliers filed with no sourcing determination. Didn't know or not telling? While we can't be certain why virtually all filers did not have meaningful sourcing declarations, we do know that supplier education & training can improve suppliers' response time and completion rates for conflict minerals due diligence.
Seven of the world's largest industry associations collaborated with Source Intelligence and Schulte Roth & Zabel LLP to launch a web-based training module within the Conflict Minerals Resource Center (CMRC). The training module is based on the best practices developed by leaders in these ...(Read Full Article)
The Dominican Republic, Venezuela and Kyrgyzstan are the countries most susceptible to supply chain disruption, according to a new global index.
Norway, Switzerland and Canada topped the list of nations most resistant to such disruption – one of the leading causes of business volatility – on the 2014 FM Global Resilience Index.
The online tool ranks the business resilience of 130 countries, and is designed to help businesses better assess and manage supply chain risk.(Read Full Article)
The 2014 FM Global Resilience Index released today finds Norway, Switzerland and Canada top the list of nations most resilient to supply chain disruption, one of the leading causes of business volatility. The first-of-its-kind Index, commissioned by FM Global, one of the world’s largest commercial property insurers, is an online, data-driven tool and repository ranking the business resilience of 130 countries. More than a year in development, the Index is designed to help executives better assess and manage supply chain risk.(Read Full Article)
Given the limited exposure many companies have to the extended supply chain, the gateway to learning more about lower tier vendors may rest with how much our tier-one suppliers know about their own supply base. In a recent article, Sourcing Journal Online published a list of “7 questions to ask to assess risk and ensure supply.” Many of these queries will individually say quite a bit about the level of risk our tier-one suppliers are building into OEM supply chains overall – or whether they’re reducing comparative risk exposure.Leave A Comment posted in Commentary by Jason Busch (Read Full Article)
Most supply chains move in one direction: New products move from manufacturing to a customer. Increasingly, those products are coming back into the supply chain, either as returns for repair under warranty work or to be remanufactured for reuse. In fact, new research from the nonprofit organization APICS Foundation, finds that remanufacturing serves a broad array of strategic interests for companies, provides considerable career advancement potential for individuals and has become instrumental in furthering sustainability initiatives.
“Remanufacturing was once considered a niche process,” says Jonathan Thatcher, director of research, APICS Foundation. “Today it is becoming a mainstream practice.”
The findings ...(Read Full Article)
Managing risk is never far from the minds of CPOs. Risk management frequently stands out in Procurement Leaders’ Procurement Intentions Reports as a major concern. The latest Report highlights operational risk as a major focus for CPOs this year.
Some external risks are obvious, such as supplier financial failure, infrastructure-damaging climate events, inadequate building codes or working practices in local or far-flung factories, or geopolitical upheaval, all of which can disrupt supply, and some of which can damage corporate image.
Many procurement transformations fail because purchasers underestimate the importance of change management.
That was the message from Blaine Hurley, senior director – sourcing excellence, global strategic sourcing at Whirlpool, who was speaking at the Institute for Supply Management annual conference in Las Vegas, US last week.
“Change management in a lot of people’s mind is just training your associates and informing them about the change that’s coming," Hurley said. "Change is difficult, don’t give anyone any illusion that it’s not, but not changing is failing.(Read Full Article)
Internal audit is a team of versatile members who assist an organization’s management to ensure controls are appropriately exercised, processes are followed, reporting is effective, and risks are mitigated. Their role makes them akin to a policing force within the organization. And the typical human behavior around cops extends to the office environment as well, and employees are wary of even talking freely when a person from internal audit is around.(Read Full Article)
“Negotiation has, for decades, been viewed as a zero-sum game, with the success for one party being at the expense of the other.”
Tim states in the article that the market trends are changing towards more collaborative and sustainable supplier relationships. Bottom line preassure, a shift in the purchase of direct materials and products moving towards a growing volume of services and solutions as well as the need for greater efficiency, speed and improved business judgment. Getting the lowest price although not ...(Read Full Article)
Supply chain risk has fallen slightly from its all-time peak last year but businesses must remain vigilant about the threats it poses, according to the first quarterly Risk Index published by CIPS.
In the first quarter of 2014, the Index – where risk is rated between one and 100 - recorded a score of 79.8, compared with 82.2 in the final quarter of 2013. This was attributed to improved economic prospects in the UK, US and Germany, and stability in the major exporting economies of the US and China preventing a major increase. The Index was at its highest in ...(Read Full Article)
THE latest Ernst & Young-Namibian Fraud & Corruption Landscape Survey shows that 79% of Namibian businesses view fraud and corruption as a big risk.
Executive management and risk management staff of 90 Namibian companies were surveyed for their views on fraud, bribery and corruption in Namibia and their efforts to mitigate these risks.(Read Full Article)
In 2013, 80% of supply chain leaders had a material supply chain disruption. It was not just one. The average company had three. Yet, in a study that we just completed, when asked about business pain, supply chain risk rates low. How come?
It is new. It lacks a consistent definition and set of practices. Companies reward the urgent. Risk management requires a focus on the important. It requires leadership and orchestration. Teams don’t know what to do. The companies that are the most mature learned the hard way. They had a disruption.(Read Full Article)
Three more officials have been arrested in the South African Social Security Agency's ongoing fight against fraud and corruption. The officials, who are based at the KwaMhlanga local office in Mpumalanga, were arrested during a joint operation on Thursday for defrauding the agency of a total amount of R752 460.
The joint operation is between SASSA, the SA Police Service (SAPS) and the National Prosecution Authority.
The arrest of the officials follows a report by a member of the public on 8 January 2012, who informed the agency that two beneficiaries from Verena in Mpumalanga, were receiving fraudulent disability ...(Read Full Article)
Five elements of a resilient supply chain
Supply chain managers tend to rely heavily on data to support decision-making processes. Data proves helpful in planning for risk but is insufficient in light of the massive number of scenarios that could disrupt a supply chain. Developing a plan to deal with so many unknowns requires a slightly different set of priorities. There are five key elements that distinguish a resilient supply chain:
1. Prepared: Designing a supply chain that is prepared for a catastrophic disruption involves understanding the risks, maintaining deep visibility into the supply chain resources, and developing operational readiness ...(Read Full Article)