Strikes at the port of Long Beach, labour disputes in France, natural disasters like an earthquake in Indonesia, a volcano eruption in Iceland grounding air flights between Europe and the US: they all disrupt supply chains. Although many companies witness the potential downside of disruptions on business continuity and performance effective supply chain risk management practices are still rare. Buck Consultants International has developed a new framework based on the concept of resilience.
“A survey BCI executed among 50 supply chain executives in various industry verticals shows that although 86% considers supply chain risk management to be important, less than 60% has a back-up plan in case a disruption occurs”, says Wesley Haaksma, consultant at Buck Consultants International. BCI advises companies to use standard risk assessment tools in combination with establishing resilience capabilities, i.e. competences that make organizations less vulnerable to unfavorable circumstances. BCI has developed a new model for resilience assessment, using 12 organizational competence factors and 5 risk source factors, which in turn consist of 140+ sub-factors.
“Our approach has two main advantages compared to tools such as mapping, critical path analysis, risk likelihood & impact analysis and six sigma. Instead of finding and implementing costly and exhaustive risk mitigating strategies for every possible contingency, our approach helps to diminish the susceptibility of companies to risks without addressing specific disruptions. Furthermore, by balancing risk sources and organizational competences, an appropriate trade-off can be made between investing in resilience and facing supply chain risk”, explains Reitze de Graaf, senior consultant at Buck Consultants International.
In a just released white paper BCI presents two case studies. The first case is about European distribution network optimization from a cost and risk perspective. It shows not only how risk sources and organizational competences can be evaluated and prioritized, but also how risk mitigation costs can be calculated.
The second case deals with a stand-alone resilience assessment. Our approach consists of three phases: scoring factors contributing to supply chain resilience; evaluation & prioritization of risk sources and competences risk mitigating strategies & financial impact analysis.
As mentioned before, the BCI framework encompasses both risk sources and competences. The main benefits are:
Interested in our supply chain risk approach and/or in the White Paper? Contact: Reitze de Graaf.