Think your lean manufacturing techniques and outsourcing to low cost regions are the answer to increasing profitability? Think again…it may be costing you more than you realize. Faster…better…cheaper. This has been the way enterprises create greater profits and competitive advantage is gained. But these practices made companies more vulnerable and created more risks to profitability such as: a rise in counterfeits from products being outsourced to low cost regions, supply disruptions due to natural disasters or supplier breakdowns, longer and more variable lead times, questionable product quality and internet crime. Unfortunately, the more efficient and global your business is, the more your business is at risk. So how can a company balance the competing needs to reduce risk while deploying efficiency initiatives?
A few forward-looking companies such as Cisco are setting up entire brand protection departments to stop counterfeits as well as supply chain risk management teams to minimize disruptions. Yet, most executives aren’t even moderately aware that their companies could be teetering on the edge.
What’s needed?
You need to focus in two areas. First, every company that makes or uses electronic components in their products needs C-level executives leading the charge and playing an active role in managing risk. It’s hard to measure risk and, as a result, often top executives don’t get involved. Well, they don’t get involved until they are clearly shown that counterfeits are costing them millions or billions a year or until there’s a major supplier failure that causes them to miss peak season sales.
Next, if you take a good look at your supply chain planning solution, you’ll see the next big problem–you don’t have everything you need to neutralize today’s supply chain and business risks. Typically the systems most companies have in place (ERP, PLM, SCM) rely predominantly on internal data that summarizes only a historical view, and provide little or no information on what is currently happening in the market. The only way to gain visibility into counterfeiting worldwide, deal with a fire at a supplier’s facility or a critical component in a new product introduction that’s in short supply is with information. But not just information that’s within your enterprise or supply chain walls, but unstructured transactional data—a current snapshot of global buying and selling activity. And you need real-time information matters such as natural disasters, geopolitical events or business issues that could restrict a vendor from meeting a critical delivery or cause your most valued customer to cancel a major order.
A new genre of software solutions, such as New Momentum, www.newmo.com, that compliment your current enterprise software investment can help you with an important part of dealing with your risk exposure. These solutions solve the problem of getting unstructured information and business intelligence from the “open market,” and they present you with risk assessment analysis through a suite of real-time, portal based SaaS application modules.
Supply chain risk management needs to be elevated to get C-level attention much like SOX initiatives have been in the last decade. You need to look carefully at the horror stories and not stick your head in the sand, thinking it won’t happen to us. Take action now to reduce the possibility of supply risk.
We are interested in hearing about your supply chain risk management experiences and concerns. And we’d like to hear if you agree with or have a different point of view.
Posted by newmomentum 