welcome to riskmethods scrm summer school! · jayaram 2019. the resilience journey. 14. supplier...
TRANSCRIPT
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
skm
eth
od
s 2
019
© A
ll R
igh
ts r
eser
ved
.
2
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
risk
met
ho
ds
20
19 ©
All
Rig
hts
res
erve
d.
3
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
skm
eth
od
s 2
019
© A
ll R
igh
ts r
eser
ved
.
4
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”
risk
met
ho
ds
20
19 ©
All
Rig
hts
res
erve
d.
5
Does BCM have a positive effect on performance in crisis and normal times?
risk
met
ho
ds
20
19 ©
All
Rig
hts
res
erve
d.
6
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
risk
met
ho
ds
20
19 ©
All
Rig
hts
res
erve
d.
7
Source: Azadegan et al. 2020, Decision Sciences Journal
Empirical study
risk
met
ho
ds
20
19 ©
All
Rig
hts
res
erve
d.
8
*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?
risk
met
ho
ds
20
19 ©
All
Rig
hts
res
erve
d.
9
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
risk
met
ho
ds
20
19 ©
All
Rig
hts
res
erve
d.
10
Resilience in Supply Chains – A Triadic Frameworkri
skm
eth
od
s 2
019
© A
ll R
igh
ts r
eser
ved
.
11
Source: Azadegan, Jayaram 2019
Resilience in Supply Chains – A Triadic Frameworkri
skm
eth
od
s 2
019
© A
ll R
igh
ts r
eser
ved
.
12
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
skm
eth
od
s 2
019
© A
ll R
igh
ts r
eser
ved
.
13
Source: Azadegan, Jayaram 2019
The Resilience Journey
risk
met
ho
ds
20
19 ©
All
Rig
hts
res
erve
d.
14
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
skm
eth
od
s 2
019
© A
ll R
igh
ts r
eser
ved
.
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
skm
eth
od
s 2
019
© A
ll R
igh
ts r
eser
ved
.
16
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
skm
eth
od
s 2
019
© A
ll R
igh
ts r
eser
ved
.
17
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
skm
eth
od
s 2
019
© A
ll R
igh
ts r
eser
ved
.
18
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
skm
eth
od
s 2
019
© A
ll R
igh
ts r
eser
ved
.
Real-time Visibility
…What took days can be done in minutes
AI can quickly identify relevant threats…
risk
met
ho
ds
20
19 ©
All
Rig
hts
res
erve
d.
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
risk
met
ho
ds
20
19 ©
All
Rig
hts
res
erve
d.
risk
met
ho
ds
20
19 ©
All
Rig
hts
res
erve
d.
22
Source of Truth
• Establish a comprehensive risk profile
• Integration of internal & external views of risk
Source of Truthri
skm
eth
od
s 2
019
© A
ll R
igh
ts r
eser
ved
.
23
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
risk
met
ho
ds
20
19 ©
All
Rig
hts
res
erve
d.
risk
met
ho
ds
20
19 ©
All
Rig
hts
res
erve
d.
25
Managed Collaboration
Managed Collaboration
A library of standard mitigation plans for streamlined response
risk
met
ho
ds
20
19 ©
All
Rig
hts
res
erve
d.
Managed Collaboration
• Coordinate mitigate efforts
• Provide visibility to all stakeholders
• Track the impact of your efforts
risk
met
ho
ds
20
19 ©
All
Rig
hts
res
erve
d.
risk
met
ho
ds
20
19 ©
All
Rig
hts
res
erve
d.
28
Culture Change
• Actions are mandated• Outliers are called-out and acted
upon• Risk awareness is part of decision
making
Culture Change
risk
met
ho
ds
20
19 ©
All
Rig
hts
res
erve
d.
The Journey to Resilience: Key Milestonesri
skm
eth
od
s 2
019
© A
ll R
igh
ts r
eser
ved
.
30
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, [email protected]
➢ Bill DeMartino, [email protected]
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...