SCM Game Changer
- 1. Supply Chain Game Changer Jason Lutowsky In J.Paul Dittmann’sbook, Supply Chain Transformation,he discusseshisideaof the 7 supply chaingame changersthat resultinsignificantstrategicimpactforcompanies. Althougheachgame changershouldhighlybe considered,Ibelieve thatthe implementationof RiskManagementina companyholdsenoughpotentialvalue toasupplychainto be a new game changer. Throughinternal and external evaluationsof risk,companiesmaydevelopstrongersupplychainstrategiesthatwill lead to maintainingcompetitive advantages intheirindustry. Whenbudgetsare tightand resourcesare focusedonthe short-term, itbecomes difficultfor companiesto openupfor relocatingtheir time &resources. However,allocatingpreciousresources nowto analyze potential risksof daytoday business throughoutall tiersof theirsuppliers reducesthe probable negativeimpactthatitwouldhave onyour supplychain.Focusingonthe internal risks,astudy by the BusinessContinuityInstitute’sSupplyChainResilience Reportfrom2015 states,“74% of companiesexperience atleastone supplydisruptioneveryyear”. The same reportcorrelatesthat72% of these companieslackedacomplete overview of theirsuppliersforriskmanagementandresultedin productiondowntime andlossof sales. Beingproactiveagainstinternal riskswill allow businessesto continue flowingmore efficiently andeffectivelywhile minimizingthe potential lossof sales. While internal risksare knowntodisruptthe flow of businessandcause a ripplingeffectdown the supplychain,the external risksare muchharderto for see and may leadtodetrimental issueswithin theirsupplychain. External riskswillhappenregardlesswhichiswhyitisimportanttohave a basicplan of actionof how yourcompanywill react. An importantandcurrentriskthat is aboutto upsetmany companiesglobal supplychainthatsell productsinthe UnitedStatesisfromthe changingpolitical agenda. PresidentTrumphasalready withdrawn fromthe Trans-PacificPartnershipforrenegotiations, but as well hasplansto add a 35% tariff onimportedgoodstothe US. These political factorsnowhave companiesina struggle toreevaluate theirsupplychains. Asquestionsarise toaccommodate these changesfromrelocatingorfindingnewsuppliers,towhethertopassthe increasedcostsdownto the customerswill take some seriousresourcestofindanew optimal solution.Environmental risks should playa strategicrole inevaluatingsourcingandmanufacturingoptions.Understandinghow prone certain areas of the worldare to natural disastersshouldinfluence astrategyof whatactionsshouldtake place whentheydooccur. Lastly the technologysectorof riskmanagementfacesthe issue of consistent improvements. Companiesface the trade-off betweenhavingcompetitive advantage withthe newest, oftenexpensive,technologyverse howobsoletewithlow salvagevalue afteracouple years.As technological risksaffectspecificindustriesmore thanothers,itshouldnone the lessbe carefully weighed. These external risksare hardto predictandplanfor,but the importance of analyzingthe possibilitiesandconductingastructure fora plan of action will allow yourcompanytolessenthe severityof theirpotential impacts.
- 2. The importance of riskmanagementisdisplayedcontinuouslythroughthe analysisof the internal andexternal risksandabove all cangive yourcompanygreatercompetitiveadvantage. Conductingsupplychainriskmanagement providesmuchgreaterleverage overyourcompany’s competitionthatdoesnotyethave itin place. Once evaluatedandimplemented,yourcompanywillbe able to handle these riskswithquickerresponse timesand more effectivelythanyourcompetition. These othercompaniesthatdidnotuse resourcesaheadof time to planforriskswill be requiredto allocate more resourcesonshorternoticestohandle andfix the issues. ResearchconductedbyMIT and PwCabout the maturityof riskmanagementprocessesstatesthat“44 percentof companieswith mature processessuffereda3 percentor more decline intheirrevenue,comparedto57 percentwith immature processes”(Erana,2014). Althoughthe lossesinrevenue are inevitable,the severitycanbe greatlyreducedwithamature riskmanagementprocess. The mature processwill leadtoamore proactive response tothese riskswill contribute tomaintaining apositive reputationforyourcompany. A case studywas conductedonAGCO abouttheirimplementationof SCRMand the resultswere spectacular. Afterdeeplyanalyzingrisksthroughoutall tiersof theirsuppliers,the companywasable to avoidand save millions onissuesthatwere arisingquickly (Banker,2015).Whenrisk managementis not successfullyimplemented,the competition’sissuesmaycause disturbances,price increasesandrevenue shortfalls all the waydowntothe consumerswhichmay hurt the brands image. Riskmanagementisa game changer thatdoesnot onlyhelpavoidbiggerissues,butprovidesnecessarycompetitive advantagesaswell. While Dittmann’s7supplychaingame changersare all majorfactors to a strongstrategicimpact on companiessupplychains’,Ibelieve thatRiskManagementshouldreplace hisSustainabilitygame changer. Beinga sustainable company hasgrownintothe infrastructure of today’sbusinesses,plans, and correlateswithbasicsupplychainstrategies. However,itdoesn’tdifferentiate companiesaseach continuouslyalreadylooksforwaystobe sustainable. Indepthriskmanagementonthe otherhandhas grownintoa greaterneedforcompaniesthatshouldbe addressedduringthe developmentof a company’ssupplychainstrategy.Thisnew game changermaintainsthe resilience neededforan efficientsupplychainwhile workinghandinhandwithcollaborationof the suppliers.
- 3. Works Cited Banker,S. (2015, December2). NewSolutionsforSupply Chain RiskManagement:A CaseStudy. RetrievedFeburary6,2017, fromForbes: http://www.forbes.com/sites/stevebanker/2015/12/02/new-solutions-for-supply-chain-risk- management-a-case-study/2/#519322b51277 Erana, L. H. (2014, September18). The Tech Sector's Top 10 Supply Chain Challenges.RetrievedFeburary 6, 2017, from Material Handling&Logistics:http://mhlnews.com/technology-automation/tech- sector-s-top-10-supply-chain-challenges BusinessContinuityInstitute,SUPPLYCHAIN RESILIENCEREPORT,2015. RetrievedFeburary6,2017, fromRiskMethods: https://www.riskmethods.net/en/supply-chain-risk-management