Inside Supply Management

Gary Lynch, national practice leader for business continuity management at Marsh in New York, says that through impact modeling, companies can understand how a catastrophic breakage point will affect a supply chain, allowing companies to focus on alternative strategies and solutions for those areas with the greatest risk.

For example, a company providing product to the U.S. Department of Defense process maps its supply chain and identifies that a pandemic may be the greatest risk in producing its product. However, further exploration reveals that the risk is not as much to people as it is to the functions they perform. In fact, it is a specific role and skill set, an electromechanical engineer, which becomes the single point of failure because in a time of crisis, finding a replacement may take as long as 18 months due to clearance procedures.

"By modeling the impacts of that scenario, companies can then follow a path of alternative solutions and create a decision process on how to effectively mitigate the risk, realizing, of course, that you can never really eliminate it," says Lynch. Because of the ongoing, continuously evolving nature of market dynamics, supply chain risks need to be monitored and reassessed on a regular basis.

-- Gary Lynch