welcome to riskmethods scrm summer school! · jayaram 2019. the resilience journey. 14. supplier...

Welcome to riskmethods SCRM Summer School!

Dr. Arash Azadegan, Associate Professor – Supply Chain Risk Management at Rutgers University

Bill DeMartino, Managing Director, Americas at riskmethods

The Ripple Effect: Supply Chain Disruption Impacts to Your Business 201

TODAY’S LESSON

Summer School Teachers:

201Agendari

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Business Continuity Management: Review

Business continuity in the “New Normal”

Supply Chain Resilience & the Triadic Model

The Resilience Journey

Live Q&A

Business continuity: Review

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The sum of a firm’s total plans for prevention, continuance and restoration of mission-critical functions during and after disaster

What is meant by business continuity?ri

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Slide 4

Business Impact Analysis

Hazard Assessment

Preparedness Level

Response & Recovery (R2) Plan

R2 Structure

R2 Objectives

Institutionalization

Practices

Enforcements

Business continuity in the “New Normal”

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Does BCM have a positive effect on performance in crisis and normal times?

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Information processing theory (Gabraith, 1973): Firms with better alignment of their information processing with needs of their environment better survive

Improved Information Processing

Identifying risks and capabilities

Specifying Objectives

Making information available to all

Improved

Performance in

facing SC Disruptions

Improved

Performance in

Routine Operations

?

?

Business Impact

Analysis

Response Plan

Institutionalization

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Source: Azadegan et al. 2020, Decision Sciences Journal

Empirical study

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*Results based on 242 supply chain managers involved in business continuity management

Empirical study

Source: Azadegan et al. 2020, Decision Sciences Journal

How does involvement of SCM in BCM affect performance in crisis times?

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Levers of control Theory (Simons, 1994): Firms with better control mechanisms perform better. Control Mechanisms are (1) diagnostic (2) interactive

Source: Azadegan et al. 2020, Supply Chain Management: An International Journal

Supply Chain Resilience& the Triadic Model

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Resilience in Supply Chains – A Triadic Frameworkri

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Source: Azadegan, Jayaram 2019

Resilience in Supply Chains – A Triadic Frameworkri

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Source: Azadegan, Jayaram 2019

Inherent Resilience

Financial Strength, Market Strength, SC Efficiency

Anticipatory Resilience

Redundancy, Visibility, BCM, Safety Stock

Adaptive Resilience

Responsiveness, Recovery Execution, Situational Awareness

Supply Chain Resilience

Inherent Resilience

Anticipatory Resilience

Adaptive Resilience

Balanced Resiliency across the Supply Chainri

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Source: Azadegan, Jayaram 2019

The Resilience Journey

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Supplier Engagement & Network Resilience

The inclusion of risk in SRM and as an element of your supply network

− Support and enablement of supplier efforts

− Risk in SRM

− Collaboration

Pillars of Risk Management Maturityri

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Risk Identification

Visibility to risk profiles and emerging threats

− Scope of actors

− Coverage of risk types

− Supplier assessments

− System of record

− Accessibility

Risk Mitigation

Organizational readiness of both proactive and reactive risk management

− Criticality assessments

− Mitigation preparedness

− Event analysis

− Risk aware processes

Governance

Fostering the adoption and impact of your SCRM program

− Team Composition

− Sponsorship

− Awareness

− Metrics

Maturity in SCRMri

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Level 1: Recognizing

Top Suppliers. Financial oriented

Risk profiles created for most direct material suppliers during on-

boarding.

Profiles & threat monitoring of all

suppliers sites. On-going assessments.

Risk system-of-record established. Visibility is extended to select Tier-

2 suppliers.

Profiling & monitoring of the extended supply

network

Decentralized & ad-hoc for each category

Departmental, primarily reactive

Center-led w/ mitigation plans in place. Mandatory

actions established.

Oversight enforces action standarization. Impact to revenue is

understood

Risk reduction targets. Tie to SCM solutions to

understand event impact

Not actively pursued Discussed at supplier check-in meetings

Continuity plans collected. Risk part of

award decisions

Work with supplier on risk reduction. Supplier

shares relevant sub-suppliers

Supplier programs are incented. Broad

network visibility & collaboration

Small team manages risk

Supply management team trained in risk

management

COE established. Job expectations outlined.

Successes shared.

Leaders review risk prepardness. Risk council formed.

Metrics part of performance. Risk

integrated to ERM and reported to board

Level 2: Understanding

Level 3:Managing

Level 4: Mastering

Level 5:Leading

Identification

Mitigation

Network Resilience

Governance

Maturity in SCRM: Journey to Resilienceri

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Level 1: Recognizing

Top Suppliers. Financial oriented

Risk profiles created for most direct material suppliers during on-

boarding.

Profiles & threat monitoring of all

suppliers sites. On-going assessments.

Risk system-of-record established. Visibility is extended to select Tier-

2 suppliers.

Profiling & monitoring of the extended supply

network

Decentralized & ad-hoc for each category

Departmental, primarily reactive

Center-led w/ mitigation plans in place. Mandatory

actions established.

Oversight enforces action standarization. Impact to revenue is

understood

Risk reduction targets. Tie to SCM solutions to

understand event impact

Not actively pursued Discussed at supplier check-in meetings

Continuity plans collected. Risk part of

award decisions

Work with supplier on risk reduction. Supplier

shares relevant sub-suppliers

Supplier programs are incented. Broad

network visibility & collaboration

Small team manages risk

Supply management team trained in risk

management

COE established. Job expectations outlined.

Successes shared.

Leaders review risk prepardness. Risk council formed.

Metrics part of performance. Risk

integrated to ERM and reported to board

Level 2: Understanding

Level 3:Managing

Level 4: Mastering

Level 5:Leading

Identification

Mitigation

Network Resilience

Governance

The Journey to Resilience: Key Milestonesri

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Real-time Visibility

Source of Truth Managed Collaboration

Culture Change

Map & visualize your end-to-end supply chain

• Supplier sites

• Ports and Hubs

• Your manufacturing centers

Real-time Visibilityri

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Real-time Visibility

…What took days can be done in minutes

AI can quickly identify relevant threats…

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Real-time Visibility

Credit Rating

Cash Flow

Payment behavior

PAST

Traditional

PRESENT

CFO Departure

Product recall

Factory shutdown

Near real-time insights

Strike warning

Family plans to sell

Infringement suit

FUTURE

Predictive signals

From periodic assessment to enhanced awareness

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Source of Truth

• Establish a comprehensive risk profile

• Integration of internal & external views of risk

Source of Truthri

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Source of Truth

• Up-to-date and accurate means that it is actionable

• Complete picture establishes a common definition and dialog across stakeholders

• Once quantified, it’s hard to ignore

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Managed Collaboration

Managed Collaboration

A library of standard mitigation plans for streamlined response

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Managed Collaboration

• Coordinate mitigate efforts

• Provide visibility to all stakeholders

• Track the impact of your efforts

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Culture Change

• Actions are mandated• Outliers are called-out and acted

upon• Risk awareness is part of decision

making

Culture Change

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The Journey to Resilience: Key Milestonesri

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Real-time Visibility

• No process change required

• Great way to get quick wins & build momentum

• Easy adoption of new capabilities & new tech

Source of Truth

• Establish a foundation for change

• Gain executive buy-in

Managed Collaboration

• Organizational buy-in

• Resilience takes hold

Culture Change

• Participation is natural & expected

• Your preparedness is a competitive advantage

Questions?

➢ Dr. Arash Azadegan, aazadegan@business.rutgers.edu

➢ Bill DeMartino, bill.demartino@riskmethods.net

Homework

Teacher contact info:

Supply Chain Continuity Academy!

✓ Webinar Series and Expert Discussion

✓ SCRM Resources

✓ Education Workshop: How to Get started with SCRM

✓ And more to be announced...