AMR Research: The Supply Risk Management Authority

Mark Hillman is doing a fantastic job at AMR Research, investigating an area which I follow very closely: supply risk management. His recent brief on the subject (registration / subscription required), Supply Chain Risk Management Hits Mainstream, describes some of the findings of a more detailed report which the firm will release later this summer. What are some of the highlights?

First, "awareness" of supply risk management -- or "supply chain risk management" as they refer to it -- is high. According to AMR, "One-third of companies employ some type of technology to support their risk management efforts today, and nearly 50% of firms intend to evaluate or deploy new technology for SCRM in the next year or two."

Second, supply risk management is "emerging as a dedicated focus. Some firms are sophisticated in employing techniques to manage supply chain risks like supplier failures or natural disasters, while others are just starting to work on SCRM initiatives."

Third, companies are willing to make technology and process investments to mitigate and manage supply risk. According to AMR, "nearly one-third of the firms said they have dedicated budget line-items for SCRM, and 54% said that their spending on SCRM initiatives will increase in 2006."

And fourth, "Supplier failures/continuity of supply and commodity cost increases are top concerns. These worry firms the most, followed by things like managing natural disasters, geopolitical and regulatory risks, and logistics disruptions."

AMR's findings are great news for vendors like Open Ratings (now part of D&B) and JV Kelly Group that offer supply risk management solutions today. And hopefully it will provide incentive to those entrepreneurs that I have spoken with -- who will remain anonymous on this blog -- who are considering new approaches to managing supply risk and supplier information to move aggressively into launch mode. Needless to say, one of these individuals is someone I respect more than anyone when it comes to Spend Management technology commercialization. I sincerely hope he takes the plunge with a new concept that will target the risk management arena. But most important, we should commend AMR for carrying out this research and giving Mark Hillman the runway to explore a topic that should have been in the headlines much long ago.

Jason Busch

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