Supply Risk Goes Academic: CAPS Guru Research Findings (ISM Dispatch 2 — Part 3)

Please click here for Part 1 and Part 2 of this post.

The current state of supply chain risk management programs leaves quite a bit to be desired. In their talk at ISM, Professor Robert Monczka and Professor Phillip L. Carter began by sharing a few third-party studies suggesting the embryonic state of supply risk management. They cited an MIT report that suggests only "One third of companies have effective risk management programs in place" and an AT Kearney study which observed "More than eighty percent of companies lacked disaster plans and secondary sources for key categories." Yet given all the interest and investment going on in the topic, it's clear that change is happening in front of our eyes. In looking ahead, Dr. Monczka and Dr. Carter shared the following forward-looking predictions:

  • Risk management will become an embedded part of supply management
  • The need for effective risk management will force companies to look past tier one suppliers
  • Total cost of ownership (TCO) models will increasingly become part of the risk assessment process across the value chain
  • Value chain risk metrics will shift from reactive to predictive indicators

To these predictive observations, we would also add the following:

  • Commodity risk management will become a more important component of supply chain risk management for manufacturers
  • Finance will increasingly take a more supervisory and reporting role over supplier and supply chain risk management (even if risk practitioners reside or come from procurement and operations roles)
  • Communities/networks will provide new levels of predictive insight (e.g., SAP Supplier InfoNet)
  • Supply chain risk will increasingly be seen as a data and IT challenge; companies will compete as much on the basis of their ability to synthesize vast quantities of information as on the skills of their procurement and supply chain teams
  • Country risk (and the interrelationships of multitier supply chains and trading lanes involving different countries) will increasingly become a core component of supply chain risk management programs
  • Supplier management solutions that enable supplier on-boarding, supplier diversity, P2P enablement, etc. will increasingly provide the basis of supply chain risk monitoring by providing a single view of the supplier truth (i.e., a real supplier master)

- Jason Busch

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