Managing Supply Risk for "Virtual Goods"

When it comes to supply risk, it's not too difficult to make the argument that managing physical supply chains -- especially those which are global in nature -- is more challenging than securing ones involving "virtual goods" such as IT and call centers. Why? Because on top of quality, performance and general IP risk, physical supply chains are subject to a range of additional disruptions and risk elements (e.g., logistics delays). But that's not to say that managing supply risk involving "virtual goods" like outsourcing is a walk in the park. In fact, outsourcing contracts can create significant supply exposure for companies who don't take the necessary steps to proactively manage risk. Global Services, a CMP publication, published a good article recently that outlines how companies can think about managing outsourcing risk.

The article argues that companies primarily need to focus on "operational disruption risk, data risk, quality risk and reputation risk" when it comes to thinking about outsourcing supply risk. I won't spoil the rest of it for you, but if you are involved in outsourcing decisions or supplier management in the IT arena, it's a quick read that very well might prove invaluable in structuring and managing supplier agreements and performance to improve outsourcing results while reducing overall business risk.

Jason Busch

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