Risk As a Competitive Weapon for Supply Chain

Many organizations look at Risk as an evil, a challenge and even a four letter word.  Dealing with risk is commonly left to the Risk Management department who may be ill equipped to identify, let alone manage the huge Supply Chain challenges that we have seen over the last few years.   Risk can actually become a competitive advantage for a Supply Chain organization that knows how to identify and effectively manage it.

Consider the musings of Michael Koploy in his blog post on July 15^thhttp://www.softwareadvice.com/articles/scm/post-tsunami-supply-chain-all-stars-1071511/  which focused on the Supply Chain All-Stars that recovered fastest after the Japanese Tsunami.  Mr. Koploy credits fast thinking and cooperation between the Big 3 Japanese Auto Manufacturers as the key to their quick recovery.  These All-Stars were forced to share the “secret sauce” of their supply chains with one another in order to make this happen.  Great!!!   What this tells me is that not one of those companies had a viable risk management strategy in place otherwise they would not have been forced to collaborate with one another.  The collaboration was not a bad thing but was most likely not the first choice approach for any one of those companies.

 Another All-Star identified by Mr. Koploy was Canon, the Japanese producer of high quality printers and cameras.   Michael noted that Canon initially expected to take several months to recover and was “surprised” that they are already at pre-disaster production levels.  This is good news because it shows that Canon’s strategy of investing in Supply Chain redundancy has paid off.   BUT the surprise to me is that Canon’s quick recovery was a “surprise” to them.  If they have a strong risk management strategy (which they may) it is obviously not visible to those that were “surprised” at Canon’s quick response. Imagine the favorable public relations Canon could have had if they immediately announced that they had plans in place and mitigation strategies ready to execute as soon as the disaster struck.

The All-Star that may deserve the Superstar award is Apple.  Apple’s investment in its Supply Chain may very well be its secret to success – wouldn’t we all like to be that successful.  Apple has made its Supply Chain a competitive advantage and managing risk is a high priority.

Risk is scary but these days it is also somewhat predictable and inevitable.  It feels like we have been barraged by natural disasters, economic collapse, political unrest, safety debacles etc. over the last few years globally.  Any and all of these factors can have a significant impact on a company’s Supply Chain.  Risk Management must be a core competency for ANY Supply Chain organization and yet it is not.  It seems almost incomprehensible to me that the lack of a Risk Management strategy continues to be one of the key challenges for many companies.  Even those companies that do have one are not necessarily actively managing it.   It may be time to stop looking at Risk as a four letter word and start looking at it is as a real opportunity to gain a competitive advantage.

Please give us your perspective on this very important issue.  Please join the conversation . . . . . . . .