E-Handbook:

Planning for supply chain risk assessment and mitigation

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Get a grip on supply chain risk

A fire at a Meridian Lightweight Technologies plant in Michigan caused a major disruption in the automobile manufacturing industry. The fire meant that critical components used in vehicles were unavailable, and production of the popular Ford F-150 pickup trucks was immediately halted. Production of vehicles made by General Motors, Fiat Chrysler and BMW was affected as well.

While the disruption to the auto industry was not as extensive as that caused by the tsunami that devastated Japan in 2011, it did underscore the vulnerabilities and the urgent need for supply chain risk assessment.

Supply chain risk is not limited to fires or other natural disasters, large or small. Supply chain disruptions can come from almost any circumstance. For example, a supplier may not be in sound financial health, may not be keeping up with the latest technology advancements, may operate in areas of the world that are subject to global instability or may engage in unacceptable environmental or social practices.

Chief purchasing officers (CPOs) are under increasing pressure to ensure that supply chains operate efficiently, without disruption, and their suppliers are following acceptable risk guidelines. However, CPOs now have opportunities to drive digital transformation in organizations, as real-time analytics and next-generation technologies are integrated into supply chain operations.

A wide range of tools has been developed to help with supply chain risk assessment and mitigation. For example, predictive modeling tools can help foresee whether a supplier is more or less likely to be affected by climate or geopolitical disruptions. Analytics tools can also help companies perform supply chain risk assessment of their suppliers on a number of categories, such as use of forced child labor.

This handbook examines the issues surrounding supply chain risk assessment and management and some of the tools that address them.

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