Dealing With Risk In Your Supply Chain

“Wasn’t our shipment due to arrive last week?” Dealing with Risk in an uncertain world.

While it is uncertain how many shipping containers are lost at sea every year, it does happen, as do other losses and damage all along the supply chain. Evaluating, assessing and prioritizing the probability of those events are part of Risk Management.

We need to be aware of potential interruptions in the flow of goods, services, information and cash. A Risk Management Program, such as the one offered by MEP Supply Chain, has four key elements that are tied together in a top level Risk Management Plan.

The components are:

Risk Identification
Risk Assessment
Risk Action Management
Risk Reporting and Monitoring

After potential risks are identified, they are evaluated and one or more techniques to manage risks may be implemented:

Avoidance (eliminate the risk or cease the activity)
Reduction (reduce the likelihood or impact)
Transfer (shift the risk to a third party)
Retention (accept the risk as is)

Costs associated with risk mitigation can be brought into the discussion of Total Cost of Ownership to better evaluate supply chain costs.

Terry Weiner, Senior Consultant of the California Manufacturing Technology Consulting (CMTC), and a fellow MEP Supply Chain expert, states “Risk Management should be utilized at all tiers of an effective supply chain and is a critical component of preventing supply chain interruptions.”

See a complete list of MEP Supply Chain Manufacturer Engagements.

Writer:

Anthony Cerilli

Engagement Manager/Supply Chain Expert

GENEDGE Alliance

As Engagement Manager, Anthony Cerilli manages a portfolio of enterprise-wide process improvement and growth solutions services for GENEDGE’s clients. Working one-on-one with senior management, he serves clients with the objective of supporting organizational transformation, competitiveness, and business growth. Contact him at: acerilli@genedge.org