Over the past couple of weeks, you’ve most likely noticed a number of posts from my presentation with Sherry Gordon at ISM, focusing on the risk track. In it, we shared what we believe is some of the most important and condensed advise we can give to companies considering supply chain risk management technology programs. In this post, I’ll share a number of tips for SCRM success, plus some critical building blocks for framing and building a business case in the area. The first tip for platform success is the importance of using technology as an enabler and foundation for programs, not just for automation. If there is one area within procurement technology where there’s absolutely no substitute for technology, it’s supply chain risk management. That’s because SCRM platforms can allow companies to scale programs an order of magnitude further, without adding incremental resources.
Yet at the same time, just as technology is so critical in this area, before deploying platforms, we believe it’s absolutely essential to put a supply risk management business process in place and address risk as a business issue first at foremost. Without understanding all of the drivers that are creating risk in your supply chain in the first place, any limited effort to manage singular aspects of broader risks will inevitably fall short of expectations.
Next, it’s important to leverage internal data and external market intelligence to drive risk management strategies — and combine these insights into a single environment. This information is likely to come in structured and unstructured formats. Learning to harness both is critical. As is enlisting the ongoing support of senior management and the rest of the business, providing them with access to the right set information. It also goes without saying that it’s critical to keep the supply risk process visible and track the “wins” and the savings from risk avoidance. When it comes to SCRM, if a technology helps avoid the proverbial tree from not falling in the forest, you can be sure that few in the business will ever hear about it unless you actively market the success of such initiatives.
Let’s now get to a list of key business case inputs that should help drive scoping and selection in automating your approaches to supply chain risk management:
- Do more with less — focus limited resources on areas that count
- Create audit trails — beyond CYAs, they serve multiple, real purposes
- Move from reactive to predictive in your supplier management initiatives
- Analyze more of your supply base, not just a small subset (and tier suppliers as needed)
- Enable supply managers to plan for and manage performance problems and disruptions in the supply chain
- Automate the collection of supplier risk and performance information to help prevent or avoid problems and also enables a timely response as unavoidable incidents occur
- Gain access to more information than most firms typically have available within their own four walls