Here are new insights on the rising threat of supply chain risks as found in a new study by Marsh, Inc (you can get a copy of the report here - free registration required). There are some interesting findings in the report:

• Nearly three-quarters of companies (73 percent) believe their supply chain risk has risen since 2005; nearly the same number (71 percent) believe the financial impact of disruptions to their supply chain has also grown.
• No risk managers in the Marsh study considered their companies to be ‘highly effective’ at supply chain risk management. Only 35 percent considered their companies to be ‘moderately effective’ at managing supply chain risk. Meanwhile, nearly two-thirds (65 percent) characterized their supply chain risk programs as having ‘low’ or ‘unknown’ effectiveness, or said they lacked any formal supply chain risk program.

Supply chain risks come in all shapes and sizes.  Most people think of floods, hurricanes, geopolitical issues and other “major” events when they think of supply chain risks.  But the increasing complexity of today’s supply chains mean that there are literally hundreds of risks popping up every day that you better be equipped to deal with in a timely and profitable way, or you risk losing your competitiveness in the market.  The inability to deal with these issues can mean the difference between profit and loss in many cases.

Consistent with the research findings, we find that most companies don’t have effective processes and tools in place to proactively manage day-to-day risks.  Most companies have spent years putting in place systems, processes and staff to run the business like clockwork, but find themselves caught off-guard as the business increasingly does not run like clockwork.  The warning signs are declining operations performance and poor customer satisfaction that can lead to market share erosion.

Ask yourself what role volatility is playing in your company’s inability to consistently beat the competition and hit your objectives.  Chances are you’ll find that it’s playing a major role in all aspects of the business.  Then evaluate how your company responds to change today and see if you’ve effectively armed your front-line decision makers that have to manage these situations with the tools they need.

This entry was posted on Monday, April 21st, 2008 at 8:33 pm and is filed under Risk management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.