IndustryWeek.com has posted an article written by Steve Culp, global managing director, and Jonathon Wright, managing director at Accenture, on the importance of the need for supply chain managers to update frameworks for evaluating and responding to risks. Types of risks include natural disasters, political upheaval, cyber crime, and systematic attacks on financial institutions. Some of these threats are covered in a report the authors wrote with the World Economic Forum, “Building Resilience in Supply Chains.” This intense focus on supply chain risk also raises some questions such as “Have supply chain managers made things worse by concentrating on fewer suppliers to reduce costs?” and “Do government security efforts under- or over-react to the issues?” Highlights of the article include:
- “More than 80% of companies surveyed in an Accenture/MIT study expressed concern about supply chain resilience, and still only 10% are actively managing supply chain risk.”
- “Major supply chain disruptions have been found to cut the share price of impacted companies by 7% on average.”
- “Risk management must be an explicit but integral part of supply chain governance.” The authors (quoted directly) list steps that can help companies improve supply chain risk management:
- Institutionalization of a multi-stakeholder supply chain risk assessment process rooted in a broad-based and neutral international body;
- Mobilization of international standards bodies to further develop, harmonize and encourage the adoption of resilience standards;
- Provision of incentives for organizations to follow agile, adaptable strategies to improve overall resilience; and
- Expansion of the use of data sharing platforms for risk identification and responses.