Supply Risk Management: Help Wanted, Only Evangelists Need Apply

I recently had the chance to dig into the supply risk management market, examining how the overall market has evolved and the level of adoption and efforts within different industries. In my view, supply risk management is no longer limited to predicting whether or not a company's suppliers will stay solvent. Rather, supply risk management has evolved into a more holistic practice that begins with analyzing the right sourcing strategy and continues throughout the procurement lifecycle.

For example, supplier performance management, which got its humble start through supplier scorecarding, is now an integral part of supply risk management, helping predict future performance and quality. Or take the rise of compliance management when it comes to such factors as vendor labor practices (e.g. immigration status), industry certifications, and supplier sustainability. All of these are now becoming part of the broader supply management field.

Despite the elevation of all of these areas to a common cause that can fly under the supply risk flag, something is still missing for the sector to really begin to gel. And this is also despite the rise of supplier performance, safety, quality, and labor practices, which seem to hit the headlines every week. But has anyone besides a few analysts and bloggers looked at these issues and suggested that companies are facing a supply risk crisis? Not yet, at least as far as I can tell. What this sector needs most is an evangelist. This sector needs someone -- or a firm -- to step up to the plate and talk about the need for companies to put all of these pieces together and make the decision to invest in supply risk for the sake of their customers and shareholders.

Unfortunately, I doubt that D&B -- who is a logical contender to make such an investment and has a former supply risk pundit in its ranks -- is going to do it, despite their acquisition of Open Ratings. This leaves a handful of other vendors, analysts, and potential academics to make the case for supply risk and seize the corporate limelight in the process. Or perhaps a company that has recently been bitten by supply risk issues, such as Boeing, Airbus, Wal-Mart, Mattel, The Gap, or RC2, will decide to discuss the steps they've taken to tackle the issue head on. How will we judge success, you ask? When one of us is on CNBC talking about the "supply risk crisis" that companies are facing, we'll know that we have succeeded in shining the spotlight on our cause.

Jason Busch

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