Daily Archives: December 23, 2011

Risk 2011: Technology

In our last post, we indicated that the World Economic Forum had recently released its 6th annual Global Risks report, it’s 2011 edition. This report was filled with risk, thirty-seven types of risk divided into five categories to be precise. Today, we are going to discuss what Sourcing Innovation thinks are the top three technology risks from a Supply Management perspective.

03: Threats from New Technology

Your business depends on its profit margins. Its profit margins depend on keeping revenues up and costs down. Revenue often depends on having the best product for your target customers at the best price point. Keeping costs down usually depends on a lean, streamlined process which, in turn, often depends on leading-edge technology to keep it running as efficiently as possible.

If your competitor identifies, latches onto, and implements a new technology before you do, then your competitor may be able to lower its production and operating costs well below your production and operating costs. If this happens, it will be able to lower its price point, and increase its revenue at the expense of yours. Then your organization will face declining revenues with higher costs. Profits will quickly disappear. Given the rapid pace of progress in many technology verticals, this could happen overnight if your organization doesn’t at least keep up, if not stay ahead of, the curve.

02: Online Data and Information Security

Every week we hear about another data breach at another retailer. What we don’t often hear about, because consumers aren’t directly affected, is yet another network intrusion at a Global 3000. While the average hacker might want your credit card, the average hacker employed by organizations that resort to corporate espionage wants your data – and your Supply Management related data in particular. What are you making? What are the specifications? Where? With who? When are you shipping? From Where? With what carrier? If any of this data finds its way to your competition before you’re ready to release a new product, the losses could be crippling. What if your competitor is able to use your plans to jump-start their development of a better version and beat you to market? What if thieves intercept your critical shipments and sell your product on the black market? While a consumer’s financial solvency depends on her credit card information being kept secure, your organization’s financial solvency often depends on your Supply Management data being kept secure.

01: Critical Information Infrastructure Breakdown

Let’s face it, it’s impossible to manage a global supply chain without modern supply management systems and the information infrastructure that supports them. What happens if your primary data centre gets taken out? What happens if your headquarters loses power for 48 hours? What happens if the land lines fail and the one satellite that carries cellular signals for your (remote) location stops responding? The minute your internet goes down, your business stops. Literally. And since your information infrastructure could breakdown as the result of a (power) grid overload, a data centre failure, an environmental disaster, or a terrorist action, all of which can not be predicted (or prevented in many situations), this is a significant risk that requires risk mitigation plans be in place and ready to go at a moment’s notice.