Supply Risk Lurks in Many Forms

Add comment July 26th, 2006 David Bush - Iasta

I thought Michael Lamoureux did an excellent job in the past week with his analysis of supply chain risk. Supply risk is an area I’ve written about for quite some time, and I believe that it is just starting to get the respect it deserves. Thanks to supply risk evangelists like Jim Lawton at Open Ratings, it’s an area that more and more procurement and operations professionals are talking about. But Open Ratings only addresses one component of supply risk management: the proactive monitoring and predicting of supplier operational and financial risk. The truth about supply risk is that it lurks – and needs to be addressed – in the shadows of virtually all external supply-related activity. From sourcing strategy development through to logistics, warehousing, and even aftermarket service and support, supply risk should factor into all procurement and operations decisions companies make.

Given the breadth of supply risk concerns, it’s absolutely worth consulting with experts on the subject to gauge overall exposure and develop action plans to mitigate and manage risk. Protiviti, a risk management consultancy, is a great firm to talk to as a jumping off point, and has developed some outstanding thought leadership on the subject. AMR Research is also building some excellent research and knowledge in the area as well. Ariba is noticeably quiet when it comes to supply risk. This is a shame, because given their expertise when it comes to global sourcing and their direct materials supply management experience gained from FreeMarkets, I have no doubt they could build an exceptional advisory practice — not to mention integrating supply risk capabilities into their solutions — in the area.

- Jason Busch

Many thanks to Jason for adding more thought to the last Weekend Series, you can read more of his daily commentary in his signature link.

Entry Filed under: General, Global Supply Issues/Risk, Supplier Performance, Suppliers