Supply Risk: Why Aren’t the Numbers Generating More Attention?

When we publish an article on Spend Matters looking at supply risk, commodity volatility, supplier performance or another topic that I often find of significant genuine interest from a public service perspective, we're lucky if we get five hundred views in a twenty-four period (contrast this with an article highlighting the use of a somewhat undifferentiated technology and you'll see that "what sells" is not always what I see as the most important topic). Alas, given the importance of the supply risk, I'll never give up on the discussion and plan to continue to share stories such as this one, which highlights the potential of disruptions in the supply chain. The above-linked piece provides solid historical context, from what I often describe as the logistical secret of certain manufacturing industries, the air freighting of parts (which was heavily disrupted during the volcano eruption in Iceland earlier this year), to older but still useful stories including how Nokia trumped Ericsson during a capacity constrained situation for radio frequency chips.

The piece also calls attention to a recent Marsh study that looked at Europe and Asian supply chains, finding that "13 percent of respondents had experienced a supply chain disruption in the past two years." This number is significantly less than a recent AMR Research study that I'll share some of the highlights from in a future post, but I suspect the low percentage could be owing to the types of individuals the insurance broker surveyed. Still, it's clear that manufacturers are bearing the greatest burden of disruption with, according to another survey, "a 58 percent increase in disruption to their supply chains in the previous 12 months," which compares with "a 35 percent across all industry sectors."

With the specter of supply disruptions rising due to longer lead times, the state of the overall economy, attempted terrorist disruptions and a range of other factors, now is the time to get serious about looking at supply risk as an independent yet integrated discipline within procurement, finance and operations functions. For further reading (and viewing), I encourage you to become familiar with our latest research in the area:

Next Level Supplier Management -- Technology, Practices and Approaches for Cost Reduction, Risk Improvement and Supplier Development -- This paper will help you understand supplier management at a deeper level, and to leverage supplier management platforms to achieve more in the areas of risk reduction, supplier diversity, and CSR.

Supply Risk Management and Supplier Performance Management – Managing Your Supply Base in Real Time is a white paper in which Spend Matters and MetalMiner along with research sponsor Ivalua offer solutions and insight as to how companies can identify, analyze, and mitigate supplier risk at all levels of their supply chains.

Analytics: Spend Visibility and Beyond – Analytics Broader Role in Procurement and Supply Chain (Using Intelligence to Drive Early Intervention) -- An analysis of how information and data management strategies can help you and your organization detect early risk warning signs within your supply chain as well mitigating tips and tactics you can employ before things become a problem.

Jason Busch

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