Today’s commentary guest post is from Jon Bovit, Chief Marketing Officer of Resilinc, a provider of supply chain resiliency solutions for industries including high-tech, medical devices, and automotive manufacturers. SI recently covered Resilinc in detail in Do You Know What’s At Risk? Resilinc Does! and Will Resilinc Resonate with Your Supply Chain.
Today’s supply chains are complex, global, and highly dependent on
sub-tier suppliers. Long term sustained success of companies is hugely
dependent on the resiliency of their suppliers. Despite this, most supply
chain leaders are unable to readily access critical supplier information
necessary in order to manage business effectively. Supply chain leaders need
a solution that maps the global supply chain across multiple tiers, identifies
critical supply chain dependencies, exposes critical vulnerabilities and
single points of failure, manages risk mitigation across the organization,
and optimizes resiliency practices throughout the organization.
Despite popular opinion to the contrary, the harsh reality is that measuring supply chain risk at the supplier, or even the location, level is inadequate for today’s
global and complex supply chains. In order to properly
managing supply chain risk, a company must start by mapping its
global supply chain down to the individual products, parts, sites, and revenue across
each of the multiple tiers. Once the multi-tier supply chain is mapped down to the
product and part level, with the proper methodology, the company can calculate risk scores based on (multiple measures of) financial
risk, location (economic and
geopolitical) risk, and recovery risk (recovery time and BCP). By evaluating
supply chain elements based on inherent financial, location and recovery
risks (which align well with the risks identified in the recent World Economic Forum Global Risks report), supply chain practitioners can choose the most effective mitigation
As an example, by utilizing the above methodology, the Resilinc platform is able to quickly identify high risk, high
revenue, single sourced parts for a high-revenue producing business unit.
The high risk may come from long recovery times from a specific supplier
manufacturing site in Malaysia or Japan. The customer can then come up
with specific risk mitigations strategies for those specific high risk,
high revenue single sourced parts before a disruption occurs, which could save the company millions in losses and unmeasurable damage to its brand. If risk was measured at the supplier level, these details would have been missed completely.
Customers should not only focus on assessing and mapping risks based on
their supplier global footprint and site locations, but also should
capture sub-contractor and sub-tier supplier dependencies, site
activities, part origin, alternate sites, recovery times, emergency
contacts, and business continuity planning (BCP) information. By focusing
on identifying critical vulnerabilities and the highest risk exposures
using quantitative scores and impact analysis at the product, part, and
site level, leaders can direct limited budget and resources into the right
areas for optimal protection against future supply chain disruptions.