Supply Chain – Information Risks
23/08/2017
Some of you may know from a previous blog that I started a Diploma in Supply Chain Management L6 with Toi Ohomai. Mainly because the businesses I am talking to are usually in the primary sector and are typically part of a significant supply chain process. In order for me to better understand some of their challenges I thought I should get some grounding as a potential manager in the Supply Chain Process.
The course is online and I am with a core group of operational, logistics and supply chain professionals looking to develop their skills and enhance their careers and business performance. Not coming from a background in operations seems to be both a challenge and an advantage.
The programme cover the following topics:
Organisational Strategies, Alignment and Linkages
Customer Management and Data Analysis Methodologies and Tools
Market Supply and Risk and Demand Management
Supplier Selection and Management
Financial Analysis for Supply Chains
Financial Analysis Tools for Supply Chains
Communicating with Supply Chain Stakeholders
Developing Supply Chain Teams
I put out a blog after I had completed the first module which focused on LEAGILE supply chain strategy which has a decoupling point between Lean upstream supply activities (raw materials, production, manufacturing, logistics etc.) and Agile downstream customer activities (customer service and retention, channel to markets, customer relationship management, demand management, product/service monitoring etc.). It was the first time I’d heard the term LEAGILE being used but makes a lot of sense in that you want to be as flexible as possible with selling products in markets but as efficient as possible in making and delivering those products. The challenge comes as competition delivers products that are individually personalised to the person as opposed to the segment. This is something that companies like Nike are grappling with as the market heads towards combing personalised footwear but delivering it at scale.
Currently I am studying module 3 and covering Risk in the supply chain. There are three basic flows within a supply chain processes: Physical, Financial and Information. Supply chain risk is the event or incident that affects these flows, resulting in negative influences for supply chain partners. The term ‘risk’ is also interchangeable with other terms in supply chain management, such as ‘uncertainty’, ‘vulnerability’ and ‘disruption’. The latter is of course the major buzz word in the topic of digital transformation. Disrupt or be disrupted. It’s really all about constant change and risk management.
What’s interesting is that in the course it highlights examples where a lot of risk is clearly generated through lack of visibility and transparency in the supply chain. Risks highlighted in the course are
Risk of information accuracy: inaccurate information can lead to decision making errors; sample risks are failure to communicate with customers and/or suppliers, error forecasting, information distortion, lack of information about competitors, order fulfilment errors, lack of visibility/transparency, the bullwhip effect (where orders sent to the manufacturer and supplier create larger variance then the sales to the end customer).
Information security: caused by internal manage system problems, or external impacts such as cyber-attack or natural disaster. Supply chain members could lose business confidentiality, hence lose competitive advantage and intellectual property; risks such as IT/IS infrastructure breakdown, system chaos, lack of IT/IS integration, internet security, lack of IT/IS compatibility, global outsourcing, and poor relationship management with supply chain members.
These “Information Risks” are area areas that new tools and technologies are looking to address and enabling greater opportunities to reduce supply chain frictions by making data more visible to parties involved. Risk areas in the core of human survival such as food safety in the supply chain is a classic example where information on incidents and visibility at greater speed is becoming essential in a global supply chain network.
A problem for your food product in market can completely destroy a product line, a brand and even a country’s reputation. It’s why Walmart are spending heavily in exploring the use of technologies such as Blockchain to increase transparency through the supply chain and reduce the risks and the friction in quickly identifying potential issues and acting on them.
I can now clearly see that the company I work for has lines of business that can be utilised in harmony together to help business innovate and reduce friction and risk in their supply chain process. Opportunities to re-look the process or service designs, improvements in the visibility of operational data, provision of real-time information that decision makers can use to manage their risks in a timely way and the creation an exceptional customer experience that enhances client management and keeps them ahead of the competition.
I will keep you posted on other areas where I see the course connecting with real world technology solutions. Thanks for reading and happy to talk to any supply chain specialists out there!
Written by Ian Gray