UPS Capital sponsored study shows supply chain risk mitigation strategies lacking

While many supply chain executives are well aware of the risks facing their supply chains and the undesirable consequences, many are still not developing and executing strategies to properly manage identified risks.

This finding is according to a new study, Managing Risk in the Global Supply Chain, sponsored by UPS Capital Corporation, and conducted by the Global Supply Chain Institute at the University of Tennessee.

UPS Capital is a business unit of UPS that enables smarter trade through insurance1, trade finance2 and payment solutions3. Through its affiliates, UPS Capital offers risk mitigation solutions in Europe in the following countries: Germany, France, Italy, Spain, Switzerland, Austria, Belgium, the Netherlands, Ireland, and the UK.

One of the study's major findings was, of the 150+ firms surveyed, 90 percent did not formally quantify supply chain risk when outsourcing production, and not one of the surveyed participants used outside expertise to help assess supply chain risks. "We were surprised by some of the findings regarding the lack of mitigation strategies," said Dr. Paul Dittmann, ‎Executive Director of the Global Supply Chain Institute and the study's author.

"The supply chain is one area of a company where executives are faced with balancing operational efficiencies, all without actually having direct control over many of the moving parts, thus making risk mitigation strategies almost essential to operations. Any business that does not have some basic form of risk mitigation plans in place is simply gambling with its existence," stated Dittmann.

This study also yielded other important findings, including that most participants' companies have risk managers somewhere in the company, often in the legal and finance areas. However, most of these risk managers are not aligned to supply chain risks, resulting in significant gaps in companies' overall mitigation strategies.

"We all know the threats are very real, and there are multiple ways to mitigate risk," said Dave Zamsky, Vice President of Marketing for UPS Capital. "Based on the finding of the study, while supply chain executives acknowledge insurance as a major way to mitigate losses, it is not on their radar screens. Two of the easiest risk mitigation strategies to implement are financial2 and insurance1 solutions.

Through products like UPS Capital's trade credit insurance1, which helps companies mitigate risks when expanding their markets; and cargo insurance1, which protects customers' goods in transit, companies can easily begin to apply basic risk mitigation strategies. Providers like UPS Capital have a vested interest in helping businesses avoid losses and prepare for the unknown."

1. Insurance products are offered only in Germany through licensed insurance producers affiliated with UPS Capital Versicherungsmakler GmbH. UPS Capital Versicherungsmakler GmbH is a wholly owned subsidiary of UPS Holding GmbH. UPS Capital Versicherungsmakler GmbH reserves the right to change or cancel the program at any time. The program is governed by the terms, conditions, limitations, and exclusions set forth in the applicable insurance policy.

This information does not in any way alter, supplement, or amend the terms, conditions, limitations, or exclusions of the applicable insurance policy and is intended only as a brief summary of the program. Please consult the policy for exact terms and conditions. No warranty, guarantee, or representation, either express or implied, is made as to the correctness or sufficiency of any information contained herein. Insurance coverage may not be available in all jurisdictions. Insurance is underwritten by a national insurance company.

2. Loans are only available in the United States and are made in California are subject to a Department of Corporations California Finance Lenders License. Products may not be available in all areas and may be modified based on requirements. Check with your UPS Capital representative for local availability. Credit availability is subject to approval.

3. Services are only available in the United States. All services in connection with the UPS Capital Merchant Services Program are provided by Chase PaymentechTM and all fees charged for services are determined by Chase Paymentech. All decisions regarding approval will be made solely by Chase Paymentech under Chase Paymentech's then current criteria.

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