Global Risk Map
Global Risk Landscape
Risk and sustainability are not mutually exclusive. The linkage between risk and sustainability is gaining traction due to social and environmental impacts and requirements for tighter regulations with more detailed monitoring. Leaders in organizations are recognizing sustainability is more than environmental. In fact, it requires managing all risk for business. Global Supply Chains in the future will need to manage both a greater degree of risk requirements and increased sustainability value.
To achieve this, stronger process management and new automation tools will support these demands on company’s supply chain for risk performance and corporate social responsibilities (CSR).
Fixing Weak Links in the Supply Chain
1. Create a vision to predict, prevent and mitigate impact to Supply Chains (SC)
2. Develop contingencies and buffer with options
3. Employ smart technologies
4. Look down the SC pipeline to create more robust processes into the suppliers’ supplier
5. Develop cross-functional risk processes and create synergies
Mitigating impact to supply and delivery while keeping current with trade regulations and supplier engagement though Supply Chain Risk Management (SCRM).
Below are points and a link from the World Economic Forum (WEF)
An Important Subject of the Building Resiliency, Offsetting Risk and Gaining Efficiencies and How Do You Balance Those in Today’s Connected World.
Initiative aims to:
Supply chain is a key to competitive advantage in many companies, significantly determines the social, economic and environmental impacts of your company, which in turn influence more and more of your stakeholders and shareholders. Hence a sustainable supply chain strategy representing one of the most important success factors for achieving sustainable development for your company and must exhibit the following characteristics:
Additional reference link on building supply chain resilience: https://www.youtube.com/watch?v=lxf-uArALCw
Countries that have the most resilient supply chain
Resilience – is about having contingency plans in place – example is having good practices and processes with technology enabling visibility and transparency with what your suppliers’ suppliers are doing. There is a case were multiple first levels of suppliers all deal with one airbag manufacturer in Japan. When the airbag supplier has a problem all automotive suppliers first tier or level have a problem with air bags installed into steering wheel systems.
Japan's manufacturing industry weathered the post-Fukushima crisis pretty well, all things considered, but other countries are less prepared for big disasters report says. By 24/7 Staff
Resilient Supply Chains Require
Resilience happens by design and not by accident. The resilient supply chain requires two (2) critical capacities: The capacity for resistance and the capacity for recovery.
1. Resistance defines the supply chain’s ability to delay a disruption and reduce the impact once the disruption occurs.
2. Recovery, defines the supply chain’s ability to recover from a disruption.
The remainder of the article identifies (link below) and discusses the trade offs between these two resilience capacities, how each responds to issues of supply chain uncertainty and risk, and investments that firms can make to enhance supply chain resilience capabilities. The conclusion: Resilience is a capability that must fit the specific needs of each firm.
Supply Chain Resilience Defined
Supply chain resilience is “the ability of a supply chain to both resist disruptions and recover operational capability after disruptions occur.“ As mentioned above, viewed from this perspective, resilience consists of two critical but complementary system components: the capacity for resistance and the capacity for recovery. Let’s look more closely at those elements:
FM Global Resilience Index - Understanding the Index
Black Swans and the Risks in Supply Chains
Yossi Sheffi of Massachusetts Institute of Technology (MIT) writes that building business resilience into supply chains means preparing for the unimaginable”
Supply Chain Disruption is a link from Thomas Goldsby of Ohio State
Harry T. Mangurian, Jr. Foundation Professor in Business at Fisher College of Business
Some great new work out of Ohio State on building resilience in the supply chain.
Resilience is an ability to adapt and having contingency in place to reduce potential disruptions.
Three Steps to Make a Business Case for Sustainability
Most companies know sustainability is important for future success, but few manage to make it an integral part of their business. To do so, it has to be worth it. Here are three steps to analyze the impact of going green:
There are reasons why CEOs should be tapping their Head of Supply Chain to unlock these benefits, not their Head of Sustainability.
Taking waste out of the system while gaining strong brand experience is creating sustainable value.
Manage Your Risk In Turbulent Times and Meet Increased Demands For Sustainability
Sustainability is risk to most companies. There is a shift upward. Value creation is the new opportunity from it.
• Improved sourcing transparency is demanded by more customers and stakeholders
• Shift by companies is to take on the challenge and use sustainability as a differentiator
• Sustainable supply chain are evolving as source of value creation and competitive advantage
Sustainability (CSR) and risk drives the value chain.
Meeting Increase Demands For Sustainability -> Value Creation
Risk and sustainability are neither separate nor mutually exclusive or even stand alone elements.
The traditional approach was to deal with risk and sustainability in this manner. Actually, they are best worked as complementary to the same coin for gaining maximum value in the supply chains of the future. The linkage between risk and sustainability has gained traction recently through a number of studies and realizations socially. This is facilitated through a lens of better transparency brought on by new technologies and improved processes. There is a social contract that companies cannot afford to ignore and gains to be made in maximizing value for them. There is a heightened awareness that companies are to be seen taking action on social, environmental and economic issues. In addition, they are held accountable for reducing risk with improved sustainable products and services.
Transparency via improved process and new technologies are an enabler to take the complexity out of large global supply chains. This makes the connections with an extended depth of supplier’s supplier relationship management, while creating sustainable value. This alignment in outlook also leads to deeper relationships and engagement between the buyer and the supplier. It improves design, reduces risk and helps the company operate more sustainably.
Increase market share through Corporate Social Responsibility (CSR) engagement.
Best in Class and Scalable Structure
Scalable Organization Structures and Evolution
Below is a good example of a balance organization structure in Supply Chain Management. It’s scalable for the business.
Best in Class Supply Chain Organization:
Want to be a "best in class" organization? Then follow the lead of highly successful companies and adopt these 10 practices in your own operation.
[Figure 1] Example of a supply chain management organization
MIT’s slide above and points below regarding Organization Design and Trade-Offs to be consider:
1. Strategic vs. Operational Coordination
i. Where in organizational Hierarchy does supply chain belong?
ii. Is it a peer to Operations, Manufacturing, Sales, etc..?
2. Line vs. Staff Coordination
i. Where do line activities occur?
ii. Does supply chain activity occur in within all areas or only staffed in supply chain?
3. Centralized vs. Decentralized Coordination
i. Which activities are best administrated and controlled from a central (headquarters) location?
ii. Which activities are best administrated and controlled from decentralized (regional) locations?
iii. How is coordination made between regions, countries, business units (BUs), channels, divisions, etc.?
Having the right people, good processes and best technology for scalable and improved business.
Key is finding balances and trade-offs between the three.
World Wide Network Case Study Example - Configuration For Global Distribution
Case study - world wide network configuration and optimized for global distribution
Outcomes and results:
Supply Chain Modeling is a useful way to do sensitivity analysis on network redesign to get these gains.
Supply Chain Design - Method for Network Configuration for Optimal Supply Chain Solutions
Major Universities, such as Massachusetts Institute of Technology (MIT)‘s slide below, are now emphasizing the use of Supply Chain Design. It is to determine best network configuration for optimal supply chain solutions though a number of scenario’s modeled and tested before implementing the changes.
Supply Chain Design is made up of three (3) major flows as circled in the MIT’s slide above and noted:
Note - Inventory models involve relationships that are not easily represented in optimization models. Practitioners who develop supply chain models harbor an “open secret” about this modeling incompatibility that is rarely revealed to the managers who are their clients” Jeremy F. Shapiro (2007) Modeling the Supply Chain (2nd. edition)
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