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In assessing the viability of a supply chain, companies often undervalue the element and complexity of risk. Supply chain disruptions can arise from external sources — such as a natural disaster — or internal sources — such as a failure to integrate all functions in a supply chain. Disruptions can also result from attempts to create a more efficient, cost-conscious supply chain environment.
A supply chain can be thought of like a rope, a series of integrated and intertwined threads. It is these threads that give the rope its strength. Break a thread and the strength of the rope is reduced. If a taunt rope, with little or no slack, receives a sudden shock, a break in the rope may result.
Just as with a rope, a supply chain must be fully integrated to operate at maximum efficiency. Failing to understand the potential vulnerabilities can compromise the supply chain’s ability to handle unexpected and sudden shocks. By understanding risk within and external to the supply chain, an organization can more clearly identify its options for optimizing the supply chain to ensure viability and strength.
What Will You Say When They Ask What Happened?
Optimized financial performance demands an ongoing analysis of the key risks spanning this increasingly complex supply network that connects suppliers, manufacturers, distributors, retailers, and customers. Analyzing supply chains with the perspective of risk results in a better understanding of the potential sources and, most importantly, the potential costs of a disruption. By adopting a risk-adjusted approach to supply chain management, organizations can more effectively begin to address such questions as:
- What is the risk of potentially moving manufacturing facilities overseas?
- What is the risk of not being able to fulfill a spike in consumer demand for our products?
- What is the risk of not having real-time inventory information from vendors or customers?
- What is the risk of managing every customer as if they were equal?
- What is the risk to your brand if an incident occurs at one of your suppliers or distributors?
In today’s increasingly complex environment, risk-adjusted supply chain management can translate to improved financial performance and competitive advantage.
Who's Looking Out for You?
The Risk-Adjusted Supply Chain Management practice at Marsh is experienced in effectively managing the issues and challenges associated with the supply chain. We understand the global business drivers that affect an organization’s profitability and performance. Our array of integrated services and solutions enable clients to identify and manage risks across their supply chains – and achieve their strategic business objectives. Our integrated solution encompasses three components:
- Assessment: Our risk assessment will allow you to identify key vulnerabilities in your supply chain and the potential risk alternatives. In addition, we aid in your understanding of the potential economic impact of your current supply chain risk profile.
- Analysis: Through our analysis, we provide you with a business case that identifies, quantifies, and prioritizes critical supply chain risks and potential alternatives. We assist you in determining an optimal future state risk profile for your supply chain.
- Roadmap: We develop the detailed plans needed to implement the changes required to achieve your organization’s future state risk profile. Our approach will institutionalize risk-adjusted supply chain management through a standard approach and the measurement of process effectiveness and results.
We work with you to understand your goals, business objectives, and industry challenges and craft customized supply chain risk solutions that build on your strengths and mitigate your risks.
If you have any questions or would like additional information, please contact us.
If you are seeking information about insurance and related services, please visit marsh.com.
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