Page 8 - Logistics News June 2019

Thought Leadership

Preparing for the fumble

By Shawn Winn, courtesy CSCMP’s Supply Chain Quarterly

Just as every team fumbles the ball sometimes, every supply chain gets disrupted at one
point or another. The trick is to be prepared beforehand so that you know how to respond.

SUCCESSFUL SPORTS teams know how to Manage risks, not threats
respond not only when the game is going well The trick to preparing for the fumble is to focus
but also when play has been disrupted. No on risk management and not get bogged down
team knows where, when or how a fumble, in threat management. A supply chain threat is
interception or turnover will happen, but a specifi c disruption, such as an increase in the
managing these disruptions must be part of its price of steel. There are an unlimited number of
game plan. individual supply chain threats at any given time.
Similarly, in the business world, you cannot If a supply chain risk manager tried to focus on
fully predict when a disruption – such as a threat management, he or she would end up
natural disaster, a labour strike or a failed trade facing a complex maths problem with dozens
agreement – will occur, but you need to have (or hundreds) of variables.
an eff ective supply chain risk management A supply chain risk, in contrast, is the impact
plan for responding to it. Without a clear that the threat could have on the company’s
plan and strategy, these risks can overwhelm strategy, operations, physical infrastructure
your operations. Every team – whether on the and/or fi nances. For example, a risk is the
playing fi eld or in the marketplace – should have destruction of a store, a reduction in the supply
considered possible disruptive scenarios and of a critical material or a transaction failure.
have practised plays to respond to them. Unlike threats, risks are not specifi c, they are
When one team is not prepared for a essentially categories of disruption impacts that
disruption and the other team is, it increases the can be prioritised and managed. By focusing on
other team’s competitive advantage. Those that the impact of the threats, instead of the threats
have practised plays at the ready are more likely themselves, you can change the maths to a
to respond quickly to a disruption and come out limited number of variables and can come up
ahead. with plays to counter your opponents’ ability
In fact, the best teams will use these plays not to gain an advantage. These plays can fi t in
just as defensive manoeuvres, but as potentially an operations playbook that your team can
off ensive ones as well. They will look not just understand and employ.
at how to recover from a disruption but how
to best take advantage of it. In the business The three elements of SCRM
world, it can come from winning new customers A mitigation plan that focuses on risks instead
because you are the fi rst company back up and of threats requires consistency and vigilance.
ready to respond to their needs. In every game, It needs to be rooted in a common view of the
the competition’s mistakes present golden supply chain and a common approach to the
opportunities for off ensive success. A resilient identifying of and response to risks.
supply chain will not only keep you running while To accomplish all this, a supply chain risk
the competition is down, it will also help you ramp management (SCRM) plan will address the
up growth when the competition is at its weakest. following elements: strategy and architecture,
To prepare for the fumble, you need to create execution approach, and training and
an eff ective supply chain risk management plan development.
that clearly lays out the overall strategy, spells Strategy and architecture: A fi rm’s SCRM
out the response plans for diff erent risks and strategy should clearly document the purpose
empowers people to respond eff ectively. of its supply chain risk management eff orts. It

6 June 2019 | Logistics News