Supply Chain Management Review has an excellent article that describes a world class approach to risk management.  The article describes Cisco’s  Supply Chain Risk Management program and how using this approach Cisco was able to respond to the Chendu earthquake last year (location to several of Cisco’s suppliers) without significant degradation of customer service.

According to the article, Cisco’s Supply Chain Risk Management Program consists of four key elements:

1. Business Continuity Planning (BCP) Program –Document recovery plans and drive resiliency standards across Cisco’s suppliers, partners and logistics providers.
2. Crisis Management – A Cisco team responsible to monitor and respond to global disruptions.
3. Product Resiliency. – Evaluating products to identify vulnerabilities in product design and developing short and  long term plans to resolve issues.
4. Supply Chain Resiliency – Identify nodes in the supply chain with recovery times that are outside of Cisco’s established tolerances and develop corresponding resiliency plans.

As a result of this program Cisco was able to identify the suppliers in the affected area within 24 hours of the Chengu quake.  Within 48 hours, Cisco had a full impact analysis completed including affected supplier sites, parts and products.  As a result, “Cisco was able to respond rapidly, ensure the safety of the extended supply chain, identify the risk exposure to the company and work with its EMS partners to mitigate the risk, thus ensuring no impact to customer shipments.”

To me, the article raises several important lessons;

1. The ability to respond quickly is critical. As the article states; “Even the most thoughtful and thorough crisis management program will not anticipate every aspect of a disruption”. 
2. When an event occurs, once the dust has settled,  go back and look for lessons learned.  Were the processes followed?  Were the right people involved?  What could be done better?  What additional information was needed?   Take the lessons learned and revise the Risk Management processes so that the next time an event occurs those issues don’t recur.
3. Don’t let executive complacency derail the risk management processes.  Use past events to highlight the need and benefit of the supply chain risk management process.  When an event occurs, log the event including the pain / cost avoided due to the risk management process being in place.   Present this to the executive team each time an event occurs.
4. Be proactive about mitigating risk.  Cisco, wherever possible, has two or more sources qualified for each part.  They have dedicated funding to identify and “de-risk” risky parts.
5. Collaboration is key.  A successful Supply Chain risk management process include collaboration within the company and with its external partners.

I strongly encourage you to read this article.  If you do, comment back with your lessons learned!  Do you have hard earned lessons learned from your own experiences?  If so, post those too!

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