Reason Magazin 2014Q3 Seite 16

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16 Reason ISSUE 3 2014 theLATEST involves collaborating and sharing informa tion with all your suppliers staying alert to trends that can affect the supply chain and being part of supply chain event management To aquire further insight into this book Reason conducted an interview with Man ners Bell Why did you feel it was important to write Supply Chain Risk I m the chair of the logistics and supply chain global agenda council of the World Economic Forum WEF The WEF has conducted extensive research in this area precipitated by the increased frequency of natural disasters that impact global supply chains namely in Japan and Thailand The need to provide a framework for identifying and understanding those risks is critical for corporations to succeed in developing sup ply chain resiliency You talk about the trade off between internal and external supply chain risks and the need to strike a balance How is that done Companies face this balance at every stage of their manufacturing process Historically companies have driven down their internal inventory and labor costs through outsourc ing lean manufacturing and just in time tech niques Outsourcing costs means outsourcing risks as well They have significantly raised their external supply chain risks What makes finding the balance chal lenging is risk assessment in terms of identifying and quantifying the exposures because the frequency of disruption is low but the severity is high It is very difficult to understand the extent of supply chain risk Accenture conducted a study that showed the decline in share prices following a dis ruption Insurers are in the best position to perform the risk assessment In the end the key to balance is for companies to develop supply chain agility the ability to quickly adapt in the face of a disruption Agility means having alternative capacity and sometimes inventory available which comes at a cost To determine the optimal balance between internal and exter nal risks requires a trade off analysis and this is predicated on having meaningful data on supply chain exposures At FM Global we underwrite based on the scenario that leads to a maximum foresee able loss How can you persuade risk manag ers and supply chain executives to consider the unthinkable the black swan events Risk managers and procurement managers need to be able to think about the unthinkable and prepare for it They need to consider the consequences even of a single component For example the automotive industry was disrupted due to the Japan earthquake shut ting down suppliers of black paint These suppliers are tier three and four in the sup ply chain and the reason companies did not address them is the lack of visibility beyond a top tier supplier In this case one small supplier of specific paint negatively affected the sales of 75 percent of the world s larg est car manufacturers In the end this had a lasting impact on pricing market share and brand reputation FM Global views supply chain risk manage ment as a thousand mile journey that starts with a single step In your opinion what is that first step The corporate philosophy on supply chain risk has to change and it starts at the top of the organization It starts with understanding the provenance of components tier 1 suppli ers and the provenance of the components components tier 2 suppliers and beyond Traditionally companies work in silos when it comes to managing risk and the supply chain with a very short term focus Purchas ing must look at the issue of cost in a much broader sense Within that analysis risk needs to be factored into the cost They need to analyze the overall manufacturing process and take a 360 degree view of the entire sup ply chain from top to bottom This is truly the first step towards resiliency The assertion in your book that supply chain failures are more systemic in their underly ing causes typically a consequence of conflicting management philosophies such as lean manufacturing versus risk is a valid one How does an organization create a supply chain risk management culture The key to reconciling philosophies is changing the relationship with suppliers from being adversarial where cost is con stantly negotiated to collaborative where cost and risk issues are worked out in part nership I think back to the 2008 2009 global economic downturn and how it affected Cisco s business due to its tradi tional adversarial supplier relationships In cutting back manufacturing during the reces sion many suppliers went out of business However when the recovery began there was a demand shock for Cisco and because those suppliers were out of business due to their adversarial cost strategy approach they were not able to immediately fulfill that sud den increased demand You talk about supply chain intelligence as being key and the importance of collaborating Agility means having alternative capacity and sometimes inventory available which comes at a cost To determine the optimal balance between internal and external risks requires a trade off analysis and this is predicated on having meaningful data on supply chain exposures


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