In our post on Playing With Fire, we indicated that your supply chain was full of hidden risks, ready to materialize unexpectedly at a moment’s notice and bring your supply chain to a crippling halt as your bank account bleeds dry trying to deal with the damage. Risks that, in many cases, could be mitigated and prevent the organization suffering and, in some cases, losing 100 Million to fines alone.
Why? Because the average organization is not spending the time and resources required to properly manage risk, or if they are, they are not managing risk appropriately. There are a number of reasons for this, including:
- Lack of Resources
most organizations do not have enough people with the right expertise to effectively manage and monitor supplier sustainability efforts, and sometimes this is because there just isn’t the budget for the resources
- Lack of Time
most of the skilled resources in an organization barely have the time to do their jobs properly, and since risk management is hardly ever anyone’s primary job, it typically becomes a side issue
- Lack of Immediacy
even though there may have been hundreds of smaller incidents in the supply chain that resulted in small fines, unexpected cost increases, disruptions, and minor brand damage, if no single incident has been severe enough to get the C-Suite’s attention, something else will always be higher priority
- Lack of Cohesion
most risk management and sustainability efforts grow organically over time as different functions encounter risks, regulations, or sustainability objectives that need to be addressed — this results in a fragmented approach to risk management that is inefficient and ineffective
But regardless of the reason, fragmented risk management does not work. It’s the biggest reason that many organizations are losing millions, if not billions, of dollars a year due to supply chain incidents (that could have been caught or significantly reduced with effective supplier management). With every department running off in their own direction, no one knows what is, and is not, being done. And that’s a problem. But it’s one that can be addressed. How?
Check out Sourcing Innovation’s latest white-paper on Why Sustainable Supply Risk Management Cannot Be Siloed: Lessons From Leaders Who Beat the Odds, sponsored by Ecovadis, for the answer.