Friday Rant: Supply Chain Risk Management at Procurement Leaders – More Practitioners, Please

This week I attended the Procurement Leaders Forum in Boston, MA. One of my objectives was to learn more about supply chain risk management (SCRM) and what leading companies are doing about it. Held in a classy venue on the 33rd floor of a fancy high-rise in Boston, MA, the forum had a good agenda and attracted senior-level delegates interested in the strategic aspects of spend management. The meeting was much more strategic than a typical ISM conference which is not geared to this level participant.

Of the presentations about SCRM, Nelida Garcia, CPO of AXA-Equitable, was the only practitioner who discussed her firm's fairly recent SCRM journey, started only a year and a half ago. The journey was precipitated by a vendor who was failing financially. The CFO asked the inevitable question: "Who is responsible for supply risk?" (Obviously expecting the answer that the CPO is). Thus started AXA-Equitable's SCRM journey, led by the CPO. While the company seems to be on a well-considered path to develop a SCRM process, the lack of resources appears to be a daunting challenge -- both in terms of people assigned to the process (the CPO and one other person) and the IT resources (largely a manual process and an Access database). Garcia's approach appears sound. In brief, it consists of assessing and scoring risks for key suppliers, putting a dollar value on a risk loss (e.g., dollar impact on the core business, cost of regulatory sanctions or litigation, and rectification costs), developing action plans for mitigating the risk, and ultimately reporting supplier risk profiles to executive management. Since the process isn't fully deployed and no big risks have occurred yet, it's early to tell how it will work out. So we'll have to stay tuned to see if this system can be successfully deployed on a shoestring.

Non-practitioners touched on SCRM as well. They provided interesting and useful insights into recent SCRM research and concepts. However, I was hoping to hear from CPOs about what they were doing in SCRM. Perhaps the dearth of practitioner presentations on the subject speaks to both the challenges of SCRM and the early-adopter stage it's in. And although Emptoris and Thompson Reuters were on the agenda for discussing supplier performance and risk management, I was disappointed that during the forum we were handed a "change order" on a slip of paper with a new topic on it -- not supply risk.

Sherry Gordon

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