supply chain risk management - women in...
TRANSCRIPT
Supply Chain Risk Management
26th June 2015 WOMEN IN LOGISITCS Victoria Gibson, Strategic Risk Consultant
Agenda
• An overview of risk management
• Supply chain and supply chain risks
• What does “good” look like?
• Case studies
• A risk management toolkit:
– Enterprise risk management
– Business continuity management
– Contract risk management
– Assurance mapping
– Risk vs reward
• Questions
2
Context
What is happening within the supply chain?
• Pressures on businesses and service providers
• Save money, add value, be green, be ethical……
• Dual sourcing; Asset sharing; Outsourcing; Rapid manufacture
• Supply chain becoming more complex
• Fewer and larger key suppliers
• More sub-tier suppliers
• More single points of failure
• Changing risk environment
3
First Step: agree terminology and scope
• Define the “supply chain” within your organisation • What and who are your suppliers, providers
• How far down the chain do you need to look? Beyond Tier 1?
• Supply chain not all one way: consider interdependencies
• Define “risk” and “disruption” • At what point is “business as usual” disrupted?
• How bad is unacceptable?
• What do your key stakeholders consider to be acceptable?
4
Risk and Risk Management
• A risk is something that could happen in the future and has an impact on objectives and outcomes • The combination of the probability of an event and its consequences (ISO
31000)
• An issue is something that is happening or has already happened • An issue may have been previously identified as a risk
• An event that happens which has not previously been foreseen is sometimes known as a “Black Swan” (
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Risks and Consequences
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• Financial • Service Delivery • Reputational • Recruitment and Retention • Competitive Edge • Footfall
What percentage of businesses recorded supply chain disruption in 2014?
75% (BCI)
Case Study
December 2012
First traces of horse and pig DNA in beef products
January 2013
29% Horse meat found in a Tesco burger
Media frenzy as scandal erupts – radio, television, newspapers and social media
Tesco start apologizing
Parliamentary Select Committee appointed
Traces of pork DNA in halal prison food
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February 2013 28 Local Authorities testing for horse meat 60%+ horsemeat confirmed in Findus lasagne ready meal (confirmed 100%) Retailers Aldi, Asda & Tesco withdraw products supplied by Comigel (France) Food Standards Authority invites UK and EU Police to investigate FSA & Police raid two meat plants and arrests are made A testing regime is implemented across the EU
March 2013 Major ports commence the sampling of beef products from countries external to the EU Food Standards Authority and Industry meet to agree how this will be prevented in the future
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Case Study
London 2012 Security Contract
• £284 million project
• Two weeks before delivery date, a major oversight was admitted
• 3,500 contingency staff drafted in
• “a humiliating shambles”
• Two directors resigned
• Who was to blame?
• Why was the risk not highlighted?
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What Does Good Look Like?
The management team of a resilient supply chain:
1. Identifies and manages the risks
2. Has good contract management skills
3. Has contingency arrangements and a good crisis management plan for if it does go wrong
4. Identifies and meets stakeholder expectations e.g. corporate social responsibility
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What are the risks?
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Toolbox What do your managers need to know? • Risk Management Framework
• Contract Risk Management
• Business Continuity Management
• Crisis Management
• Stakeholder Expectations
• Risk Appetite
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Objectives
Identification Description
Evaluation Assessment
Options Decisions
Reporting Threats & Opportunities
Monitor Review
Risk Management Framework
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• Supplier Analysis - Know the supplier, their financial position, competitors, customers, SWOT analysis etc. S
• Understanding the Relationship - supplier mapping. Is the relationship strategic?. How does each party view the other? 360 feedback U
• Performance Monitoring - Set SMART objectives & agree credible criteria to measure performance against them. P
• Early Warning Signals – Identify potential “red flags” and adopt a framework to help to foresee and manage them E
• Regular Reviews - Plan regular reviews as appropriate with agendas to cover performance and development. R
• Innovation - Encourage innovation with supplier. Don’t leave it to chance, set development objectives and stretch targets. I
• Open Communication - Develop a planned communication strategy with both the suppliers and the business. O
• Review & Re-visit Annually - Conduct a formal review every year to confirm value added and set new objectives. R
Contract Management
14
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Business Continuity Management
Communications and Crisis Management
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Assurances
• Where are your assurances coming from?
• How do you know they are adequate/accurate?
• Consider making an extra challenge
17
Assurance Mapping: The “Three Lines of Defence”
1. Business Operations 2. Corporate Oversight
3. Independent Assurance
Management reviews
Management Info
Scrutiny Panel
Programme Board
HSE External Audit
Procurement Processes
Stakeholder Engagement
Finance
Level of assurance:
18
Assurance
source
Risks
Low Medium High None 18
Risk vs Reward
• Should we take this risk or not…..
• Lehman Brothers 2008
• BP Deepwater 2010
• Virgin Spaceship Two 2014
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“we believe that a thriving commercial space industry will have far reaching benefits for humanity, technology and research for generations to come” (Virgin Galactic)
Risk Appetite: Fight or Flight 5
4
3
2
1
L 1 2 3 4 5
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I
• Are parameters
consistently applied?
• Does matrix reflect current appetite?
• Is the risk acceptable or not?
• Is your appetite the only consideration?
Like
liho
od
/Po
ssib
ility
Impact/Severity
Opportunities Missed
• Risk outcomes are not always negative
• Mergers and partnerships
• Capital investment
• Innovation and market edge
21
Bridging the Gap Identify your key stakeholders Understand their expectations Can these expectations be met within your appetite? If not – should you continue? 22
Summary
• Be clear about definitions and objectives .
Understand what the supply chain means to you
• Identify risks… and opportunities. Proportionate response
• Understand your appetite for risk and opportunity – and communicate to your stakeholders
• Know when to say no! 23
