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Supply Chain Risk a Hidden Liability for Many Companies

As supply chains grow into a global operation, the opportunities and possibilities grow right along beside them. However, there is also the growth of risk and danger. Consider the Japanese earthquake and tsunami, for instance. Steve Culp ““ who leads Accenture's Risk Management practice globally – explains in this article from Forbes how companies can address some of the hidden liabilities of larger supply chain risks (including the risk caused by locality of the suppliers: Many companies have switched from “local” suppliers to “low cost” (and often distant) suppliers on the basis of cost, without considering the full cost of risks associated with these changes. As a result, the extended supply chain now has many additional points of potential failure, suggesting that new approaches to risk management can be beneficial. Many companies face increased exposures and potentially costly logistics lead times for critical products if unforeseen events emerge ““ as they seemingly will. Culp suggests looking at the whole instead of just the singular parts of the supply chain. Supply chain risks are generally systemic, so looking at the system as a whole is a good first step in identifying if anything is going wrong. He also suggests reviewing the governance of the organization's risks. Simply documenting risks and creating ways to address them isn't good enough, as some risks will inevitably be more important than others. Prioritizing risk can help bring “big” risks to the top of the list while putting smaller risks or less likely risks closer to the bottom of the to do list. While risks such as natural disasters and unseen dangers won't go away, the way supply chains respond and prepare for them can be changed for a healthier business and advantage.

About Matthew Kabik

Matthew Kabik is the former Editor of Computer Aid's Accelerating IT Success. He worked at Computer Aid, Inc. from 2008 to 2014 in the Harrisburg offices, where he was a copywriter, swordsman, social media consultant, and trainer before moving into editorial.

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