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Article
Risk Management: Lessons Learned from Manufacturers

Cisco and ImpactFactor, leaders in SCRM, provide insights into risk management.


Full Article Below -
Untitled Document

Lessons Learned from Managing Risk

I highly recommend that you take the time to see the playback of this most insightful webinar with three great speakers, James Steele of Cisco Systems, Lisa Grossman of ImpactFactor and Bill McBeath of ChainLink Research

Although often we think that the supplier is the issue in risk, we learned that the causes and impacts are greater than the traditional confines of supply chain.

James Steele, who is the global leader for Cisco Systems Supply Chain Risk Management team, provided an in-depth walkthrough about how Cisco—from both a systems and process perspective—manages SCRM. And Lisa Grossman of ImpactFactor provided the analytics to measure the impacts of risks and the value of managing those risks. Organizations like Cisco realize huge value from their leadership SCRM programs, both in working capital and shareholder value protection or gains.

Cisco has been a pioneer in SCRM for several years and is one of the founding members of the Supply Chain Risk Leadership Council. Why is Cisco willing to share their secrets? Because the work of supplier compliance is a heavy load. As one participant on the webinar asked, “What kind of army does it take to collect all that supplier data and work with suppliers to assure compliance?” Cisco’s goal is that the industry work together toward a standard for business continuity and supply chain resiliency.

Key takeaway from James Steele’s talk: work upstream in the process to product development and engineering, and build resiliency from the outset—from the design phase of the product. 

Lisa Grossman, who is Vice President and co-founder of ImpactFactor, discussed that supply chain organizations need to broaden their perspective on risk beyond the traditional supply chain metrics of ‘on-time and quality.’ Though they are important, this does not give you a complete picture of the total impact of risk and the costs associated with recovery.

Key takeaway from Lisa’s talk: Key Performance Indicators (KPIs) for risk in the supply chain are in three categories:

  1. Financial impact—the loss in shareholder value as well as working capital due to the costs of recovery.
  2. Cost of Risk—the actual cost of insurance and the limitations extracted by insurers when companies are not managing their risk well enough.
  3. Operational metrics—supply chain costs and time metrics.

Leaders designing a strong business continuity and resiliency program will have an easier time getting funding for these programs if they can make the case to the executive team on all three fronts—not just supply chain, which the organization often feels they have already invested in with procurement and supply chain software.

Bill McBeath, Chief Research Officer at ChainLink, rounded out the talk by summarizing his current research on SCRM. His key findings were that supply chain managers often have a very broad view of the risk management activities they should be involved in. However, most felt that they were under investing in methods and solutions to deal with them, and were not faring well at managing them.

Bob Marley once said, “Life is one big road with lots of signs.” However, we clearly need the tools and methods to see those signs and then start the journey to protect our customers, our employees, and our companies from the impacts of catastrophic events.

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References

Link to the webinar: http://www.clresearch.com/2011riskwebinar.htm

Link to the research: http://www.clresearch.com/research/detail.cfm?guid=C1762CE5-3048-79ED-997A-2DFEA1F72EC0

Link to ImpactFactor http://impactfact.com/

Link to SCRL Council http://www.scrlc.com


To view other articles from this issue of the brief, click here

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