Supply Risk Goes Academic: CAPS Guru Research Findings (ISM Dispatch 2 — Part 2)

Please click here for Part 1 of this post.

Yesterday, I had the chance to sit on Professor Robert M. Monczka and Professor Phillip L. Carter's session at ISM: New Risk Management Strategies for the Extended Supply Chain. I previously covered some of the higher-level observations the academic duo made in the area of supply and supply chain risk, including a handful of nuanced comments they made which are essential to pursue the area holistically to not only mitigate and actively manage a portfolio of potential risks, but to take action when disruptions occur. But unfortunately, their academic research is not making its way into practice yet. In a recent survey of fifteen companies, Dr. Monczka and Dr. Carter found that not a single organization in the study "has developed a comprehensive set of risk KPIs that track levels and changes in value chain risk."

Despite the current state of supply chain risk programs in even more advanced companies, there are some bright spots based on what some organizations are doing. From a best practice perspective, a few of Monczka's and Carter's observations stand out. Organizations with more sophisticated risk programs:

  • Calculate "risk scores using risk algorithms"
  • Have "executive level risk committees and reviews of risks and mitigation plans"
  • Put in place "clearly defined risk categories tied to company strategy"
  • Use "risk registers in use to identify and communicate risks & probabilities/impact across functions and business units"
  • Use dedicated resources to manage supply risk programs and deploy company-wide audits of risk programs
  • Factor into account not just risk, but the "risk/reward" equation "to achieve company goals & competitive advantage"
  • Prioritize "risk identification and mitigation begins at the earliest stages of new business and product development and becomes part of company-wide culture"
  • Prevent/mitigate risks through leveraging "real-time" data
  • Are increasingly using "sophisticated risk management tools: scenario planning, contingency planning, predictive analytics, simulation"
  • Have "trained and enabled quick-strike and ongoing value chain response teams and communications/actions in response to crisis events"

As we conclude our look at Robert M. Monczka and Professor Phillip L. Carter's session, we'll comment on some of the predictions the academic team shared about the future of supplier and supply chain risk management as well as share a handful of other ideas tying to the academic recommendations and observations.

- Jason Busch

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