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Rethinking Supply Chain Risk Management

In the world of supply chain management, there are some risks no one can plan for.  We have seen this exemplified with Hurricane Sandy, the earthquake in Japan, and the 2011 floods in Thailand.  The overall prediction by many, according to an article by Adrian Gonzalez, is that disasters such as these will boost supply chain risk management on many priority lists.  Other issues such as supply shortages due to quality problems, increase of trade protectionism, the impact of currency rates, disruptions caused by IT service failures or security breaches, and problems exacerbated by social media (Gonzalez reminds readers to remember the “Pink Slime” fiasco). Gonzalez suggests that risks can be better managed when they are thought of as part of the corporate DNA: This was one of my key takeaways from an executive “think tank “session I attended this past summer on supply chain risk management.  The goal is to incorporate risk in the decision-making process at all levels of the supply chain, just like cost is today.  In other words, supply chain professionals need to get to the point where talking and thinking about risk is as common and instinctual as talking and thinking about cost and service.  Unfortunately, at many companies today, risk rarely enters the conversation or analysis. Perhaps one of the first steps to rethinking supply chain risk management is to train or retrain professionals in quantitative risk concepts.  Other bits of advice that Gonzalez offers include leveraging social media ask a risk management tool as well as mapping your supply chain.  Social media can often reach people before alert systems, so it can be more beneficial than one might initially think.  When you have a solid, viewable map of your supply chain you will be better able to highlight problem spots and zero in on any issues or breaches.  Rethinking can mean re-engaging, which is crucial in the world of supply chain risk management.

About Anne Grybowski

Anne is a former staff writer for CAI's Accelerating IT Success, with a degree in Media Studies from Penn State University.

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