The Supply Chain Risk Leadership Council (SCRLC) has published a 'Best Practices Guide' to help companies address the growing issue of supply chain risk. The report, the first of its kind, will be updated on an annual basis.
The Best Practices Guide helps organisations to identify internal and external risk factors, analyse, and evaluate supply chain risk, and understand tools and processes for monitoring risk on a continual basis. The Guide also includes several appendices providing practical templates and frameworks to assist company leaders to develop and evolve their supply chain risk capabilities. Rather than prescribing a specific approach, the Guide describes multiple potential directions applicable to a variety of industries, including concrete examples drawn from the experiences of SCRLC member organisations.
A number of recent events have highlighted the potential exposure of global supply chains to disruptions such as the recent Japan earthquake and tsunami, supplier insolvencies, political instability, weather events and labour issues. The Japan earthquake alone has been assessed as having a total insured loss impact of $22-39 billion (US) by Eqecat, which does not include all supply chain financial impacts.
The SCRLC recognised the need to pro-actively manage supply chain risk and its members have created a trusted cross-industry forum for sharing of leading practices and effective solutions in the space. Based on this collaboration, the SCRLC has developed a core set of principles and practices to foster advancement in effective supply chain risk management. In practice, members of the SCRLC were able to significantly reduce the impact and the timescale of the disruption experienced by their organisations resulting from the Japan earthquake. These organisations benefitted particularly from sharing information and approaches to handling the crisis.
John Brown, Chairperson of the SCRLC and Director, Risk Management, Supply Chain, The Coca-Cola Company:
"The Council is issuing these guidelines to foster best practices in Supply Chain Risk Management across all industries. We hope it will enable organisations to move forward in creating resilient supply chains. We recognise this document is a starting point and intend to publish updates in the future to continuously improve the knowledge within, incorporating user feedback and new practices learned from working with Council members."
Kevin Harrington, VP, Global Business Operations, Customer Value Chain Management, Cisco, added:
"Supply chain risk management is a key differentiator for leading value chain organizations and is of great importance for global organizations in an increasingly networked and complex world. Cisco's proactive and leading supply chain risk management capability was key to ensuring minimal impact to our customers during the Japan crisis."
"Deere & Company's participation in the SCRLC has provided a valuable benchmarking source to improve our supply chain risk processes and tools," said Thomas Knoll VP Supply Management with Deere & Company. "Over the past three years we have used our supply chain risk process for several natural disasters, and other supplier risk issues. Most importantly our supply chain risk process has helped us manage disruptions with minimal impact on our internal and external customers."