supply chains & risk management (scrm)
TRANSCRIPT
Supply Chains & Risk Management (SCRM):Two Powerful Disciplines Joined-at-the-Hip
Gregory L Schlegel CPIM, CSP, Jonah
Founder, The SCRM Consortiumgregschlegel@thescrmconsortium.comExecutive-in-Residence, Lehigh [email protected]
June 10, 2019
Our Dialogue Today……..
• Supply Chain Management• Risk Management• Our Point-of-View on Both---SCRM• The WHAT, WHY & HOW• Going Forward• Q & A
The SCRM Consortiumhttps://thescrmconsortium.com
SherTrack
Gregory L. Schlegel CPIM, CSP, [email protected]
Bowler Hunt, LLC
SPMS
Strategic PM Solutions, Inc
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Client Country Profile
Australia—Bahrain—Belgium—Canada—China—Copenhagen—England
France—Germany—Ghana—India—Jordan—Malaysia—Netherlands
New Zealand—Norway—QATAR—Saudi Arabia—Singapore—South Africa
Switzerland—UAE--USA
Supply Chains & Risk Management
Supply Chain Management
June 10, 2019
Supply Chain Management is a comprehensive business solution approach across the entire development, production and sales/service environment.
Product Design and Engineering
SupplierManagement
Purchasing
Logistics
Production Planning and Scheduling
Material and Inventory Management
Product Service
Sales and Marketing
Order Fulfillment
Customer ManagementDistribution
Production Monitoring and Reporting
Management Decision Support
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Supply Chain Complexity
Supply Chain Management Achieves Two Key Goals ...
Increase CustomerSatisfaction
Increase ShareholderValue
On-timeDelivery
ShippingAccuracy
RevenueGrowth
CostReductions Tax
Reduction
WorkingCapital
Efficiency
FixedCapital
Efficiency
OperationalExcellence
MarketCapitalization
OrdersFilled
CompleteRapid OrderFulfillment
Responsive Production
Cut Costs andInventories,
Optimize Assets
Supply ChainEffectiveness
BusinessStrategy
AdditionalCapital To
Invest
MarketValue
And Fuels Profitable Growth
Supply Chains & Risk Management
Risk Management
June 10, 2019
Risk Management Definition…..
• The identification, assessment and prioritization of risk, followed by coordinated and economical application of resources to minimize, monitor and control the probability/or impact of unfortunate events-----
• OR, to maximize the realization of opportunities
ASCM Dictionary15th Edition
Basic ERM ModelDefine internal risk
environmentDefine the business environment regarding how risk is viewed, risk appetite, and philosophy
Insert risk into strategy
Insert risk management into the business strategic process so that risk objectives are consistent with risk appetite and business mission
Disruptive event identification
Identify internal and external events that could disrupt the business
Risk assessment Detail the probability of risk occurrence and the level of organizational impact
Risk response Development of a portfolio of responses to meet type and severity of risk
Information and communication
Detail how event and response information is captured, communicated, and monitored
Risk event monitoring
Define how progress of risk response and time to recovery are measured
A Mature Risk OrganizationClear communication of risk information (policies, procedures, practices, thresholds) and ability to perform “what if” scenarios and change analysis
Management accountability for risk management activities within overall governance framework. Roles and responsibilities established to execute risk initiativesRisk information integrated into core decision-making. Ability to drill down to successive levels of detail from summary risk information
Use of query and reporting tools, heat maps, dashboards, balanced scorecard, ERM systems, event management. Events can trigger alerts
Ability to integrate and align risk with corporate goals. Historical analysis of key risk and performance indicators
Process
Organization
Knowledge
Technology
Performance
Supply Chains & Risk Management
Our Point of View on Both---SCRM
June 10, 2019
Supply Chain Risk Landscape…..
WHERE are YOU in the Supply Chain?
Our Point of View….
ADD Book Cover
• Supply Chain Risk Management (SCRM)….”It is the implementation of strategies to manage every day and exceptional risks along the supply chain through continuous risk assessment with the objective of reducing vulnerability and ensuring continuity.
One way to view SCRM is to think of it as the intersection of supply chain management and risk management.”----
Dr Robert J. Trent & Gregory L. Schlegel, Lehigh University
21st Century Supply Chain Risk/Maturity Model………..
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Identify, Assess, Mitigate & Manage Risk
As your Supply Chain Maturity Grows------
Your Supply Chain Inherent Risks Decrease
HIGH RISK MEDIUM RISK LOW RISK
The Four Spheres of Supply Chain Risk:“WHERE are the Risks”
SUPPLY DEMAND
PROCESS
ENVIRONMENTAL LANDSCAPE
Supply Chains & Risk Management
The WHAT, WHY & HOW
June 10, 2019
What we’re teaching at Lehigh, APICS and around the Globe1. Risk Identification, Assessment & Tools2. Uncertainty, Complexity & Risk3. Scenario & Risk Response Planning4. Fraud, Theft & Counterfeiting 5. Business Continuity Planning6. Risk Mitigation Tools, Techniques & Tactics7. Organization Development & KRI’s8. Governance, Risk & Compliance9. ERM, Enterprise Risk Management10. 21st Century Supply Chain Maturity Model
WHAT we do for organizations………
• Leverage the Body of Knowledge from our new SCRM book, "Supply Chain Risk Management: An Emerging Discipline“
• Teach the BOK @ Lehigh & Villanova Universities, in their MBA programs, along with Executive Education programs
• Facilitate over 25, 2-3-4 & 5-day workshops around the globe, per year, working with partners such as APICS(now ASCM), Leoron, out of Dubai, The Logistics Institute of Canada, Muhakat/TRAX Education, Jordan, Bahrain, IRM, SAPICS and many others.
• Provide Certificates and Certifications, via our partners, in the areas of SCRM and SCR&R, including new SCR&R Certificate from Lehigh University, emanating from a new, Online Course!
• Lead, Guide, Direct & Coach companies in their SCRM/SCR&R journey
Supply Chain Resiliency…..The WHY
A resilient enterprise has the capacity to overcome disruptions and continually transform itself to meet the changing needs and expectations of its customers, shareholders and other stakeholders.© 2011 Supply Chain Council. | SCOR Framework | From Can You Measure Your Supply Chain Resilience?, Supply Chain and Logistics Journal Canada Spring/Summer 2008 BY TIMOTHY J. PETTIT, JOSEPH FIKSEL, PH.D. AND KEELY L. CROXTON, PH.D.
TOP 5 Most Significant Supply Chain Events, by Time-to-Recover--2016
RANK EVENT DATE LOCATION # of SITES AFFECTED
# of PARTS AFFECTED
AVERAGE T-t-R (weeks)
Est REVENUE IMPACT ($B)
5 Typhoon, Megi Sep 27, 2016 Taiwan, China 403 1,508 37 $1+ 2 Series of Quakes Apr 14, 2016 Japan 246 1,824 36 $7.5+ 4 Typhoon,
Napartak Jul 7, 2016 Taiwan, China 5,393 29,827 30 $1.5+
1 6.4M Earthquake Feb 6, 2016 Taiwan 883 3,372 28 $25+ 3 Typhoon, Haima Oct 19, 2016 Philippines,
Taiwan/China 253 2,486 24 $2+
EventWatch 2016 Annual Report
- 20% of companies impacted by a moderate to severe CAT event, go out of business in 15-18 months.- Another 15% go out of business in 24-36 months
The Magnitude of Risk
Source: InsuranceNewsNet.com – Andrea Christ, Proquest LLC; June 2014http://insurancenewsnet.com/oarticle/COSTLY-SUPPLY-CHAIN-DISRUPTIONS-a-516674
Average cost per disruption:
Average number of annual disruptions:
$3.85M
The HOW……
• The Consortium provides SCRM education, Identifies and Assesses risks using Cloud-based Risk Appetite & Risk Maturity Models, Probabilistic Models and Supply Chain Mapping Solutions.
• We Quantify risks utilizing RPN, Risk Priority Numbering, VaR, Value-at-Risk, FMEA, Failure Mode Effect Analyses, Altman Z-Score and much more
• We Mitigate risks leveraging Best Practices and help Manage risks through ERM & GRC Frameworks, Organizational Alignment engagements, BCP, Business Continuity Planning, “What-if” Modeling, Scenario Playbooks and Risk Response Plans.
SCRM….by Degree of DifficultySCRM
Identify Assess Mitigate Manage
SCRM….by Degree of DifficultySCRM
Identify Assess Mitigate Manage
Easiest process.. (Academic Exercise)……Many methods such as Alerts, Risk Reports, Corporate Data, Questions-of-discovery and much more
SCRM….by Degree of DifficultySCRM
Identify Assess Mitigate Manage
Easiest process.. Academic Exercise)……Many methods such as Alerts, Risk Reports, Corporate Data, Questions-of-discovery and much more
A bit more difficult….Still an academic exercise--However, many methodologies and techniques, RPN, FMEA, T-t-R, VaR, Scenario Planning
SCRM….by Degree of DifficultySCRM
Identify Assess Mitigate Manage
Easiest process.. Academic Exercise)……Many methods such as Alerts, Risk Reports, Corporate Data, Questions-of-discovery and much more
A bit more difficult….Still an academic exerciseHowever, many methodologies and techniques, RPN, FMEA, T-t-R, VaR, Scenario Planning
Most difficult segment……Why? Because it involves CHANGE! To mitigate people, process and program risks, one may need to CHANGE BEHAVIOR! Very difficult!
SCRM….by Degree of DifficultySCRM
Identify Assess Mitigate Manage
Easiest process.. Academic Exercise)……Many methods such as Alerts, Risk Reports, Corporate Data, Questions-of-discovery and much more
A bit more difficult….Still an academic exerciseHowever, many methodologies and techniques, RPN, FMEA, T-t-R, VaR, Scenario Planning
Most difficult segment……Why? Because it involves CHANGE! TO mitigate people, process and program risks, one may need to CHANGE! Very difficult!
Still difficult to sustain, because you need Executive Commitment, funding, resources and tools to continuously Identify, Assess, Mitigate and Manage risks
THE EXEMPLAR COMPANIES DO ALL OF THESE & MORE!
NEW TOOL
0123456789
10Leadership
Balanced Scorecard
S&OP Processes
Information Systems
Integrated SupplyChain
Demand Management
IndustryAdaptiveManufacturing
Supply
Logistics
IntentionalRedundancies
Risk MitigationPlanning
Agility
Supply Chain Maturity "Heat Map" Assessment
Exemplars
SCRM Game-SimulatorSCRM Consortium Education
Single-source supplier
Manufacturer raw material safety issues
Recent plant equipment failures
#1: Case Scenario IllustrationsSCRM Consortium Education
#2: Discussions of Supply Chain Impacts
• Description of impact types, reach & severity• Discussion of relevant illustrative case studies• Presentation of models, approaches and methodologies for mitigation
Work-in-Progress
GAMES/SIMULATION Accelerate Learning
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https://edukazi.com/p/supply-chain-risk-and-resilience-level-1111
ALL LEVELS--LIVE AS of MAY 2019
Supply Chains & Risk Management
Going Forward
June 10, 2019
The SCRM “Holy Grail”
1) Reduce time & duration of the event2) Reduce severity & slope of the event3) Accelerate the T-t-R, Time to Recovery
WHY is SCRM Important
Garner New Market Share!
SCRM Going Forward in the Corporate Structure
Finance Operations
Risk Management
Supply Chain Management Quality Plant
Management
Hedging
Insurance Buyers
Enterprise Risk Mgmt.
Business Continuity Planning
Supply Chain Risk
Mgmt.Compliance
Mgmt.
Production Quality
Programs
Facilities Security
Educate
Elevate
Evolve
SCRM War Rooms….
Consortium Game Plan 2019 +
Credentials for Supply Chain Risk Management Are Advancing By: SupplyChainBrain | April 11, 2017
Analyst Insight: Lehigh University developed the first MBA SCRM class in 2010. The concept has now grown to a
global level: The SCRM Consortium includes 17 companies; SCRM continues to be a popular course at Lehigh and ERM
is currently taught at Villanova University; 20-plus workshops and 10 conferences per year are held around the globe.
A recently published book and the Consortium itself continue to support companies to Identify, Assess, Mitigate and
Manage supply chain risks. - Gregory Schlegel, founder, The Supply Chain Risk Management Consortium
With that backdrop, the current state of SCRM and resiliency looks like this: We, at Lehigh and Villanova continue to teach the concepts along with several additional universities. More and more books are coming out covering SCRM and resiliency. All the major consultancies are writing about the concept on a regular basis, new standards are coming out of ISO and ASIS, there’s a new Certificate in SCRM from APICS and a very recent First-of-a-Kind Certification in Supply Chain Resiliency, “SC-R”, coming out of The Logistics Institute of Canada, which is Case-based, Team-based and Tool-based. In addition, about three to five new software solutions are coming online every six months, supporting certain pillars of supply-chain risk. The landscape also includes new metrics, such as Time-to-Recovery, Value at Risk, Risk Priority Numbering, Resiliency Indexes, Self-Assessment Maturity Models, online Country Risk & Resiliency Indexes and more.
What needs to be done by 2020 First and foremost, a Taxonomy — an agreement on terms and definitions. This is critical to gaining worldwide traction, thus reaching and moving beyond Roger’s “Tipping Point.” New software solutions will be needed to identify global risks expeditiously and new metrics and methodologies will be required to assess those risks. And finally, additional education forums will be needed, such as universities, credentialing organizations, new standards, more global workshops, adult executive education classes and enterprise-wide projects, including multiple departments to ensure new, rich and robust case studies demonstrating the ROI.
Where things are likely to be by 2020 With that target only three years away, we can hypothesize with a degree of confidence that global supply-chain risks will not be going away by 2020! We can then project that more universities will be teaching SCRM and resiliency as a critical success factor for global supply-chain excellence. We can count on more software solutions providing autonomic global risk alerts, digitizing those alerts and providing that risk identification to subscribers who have digitally mapped their supply chains and are superimposing those alerts across their own supply chains in an effort to Identify, Assess, Mitigate and Manage risks faster than their nearest competitors. Also, there will be more credentials for SC Risk and Resiliency from universities, credentialing organizations and standards-based organizations. One outstanding issue that will probably need more time is “The ROI” play. We suspect there will be more work to be done in this area and are confident consultancies, universities and exemplar companies will contribute to shoring up this issue, along with more Assessment Tools and perhaps SC Risk & Resiliency Simulation Games, as well.
The Outlook: Beyond 2020
SCRM software consolidation may begin, providing a more comprehensive SCRM and resiliency footprint for companies across multiple industries. Combining the workflow and conversation between Finance and Supply Chain/Operations, using “The 3-E’s of Supply Chain Risk & Resiliency” (Education, Elevation and Evolution), will create a competitive advantage for companies beyond 2020.
Gregory L. Schlegel CPIM, CSP, Jonah May 2017
• First, push for Taxonomy--(Terms/Definitions)
• Second, Encourage New Software Solutions
• Third, advocate additional Standards
• Fourth, more workshops & education forums
• Fifth, more ROI case studies from exemplar companies
• A VOR, Voice-of-Record
2017
Tomorrow & Wednesday
• PANEL DISCUSSION-11th, 12:00– Supply Chain Disruptions:– WHAT do they look like—– WHY do they happen---– And WHAT can we do about them
• Dr. Robert Besseling---African Risk SME• Peter Lamb----------------South African Law Firm• Zanele Makhubu---------Risk Professional—IRM/SA Gov’t• Arno Meyer----------------Dept of Business, University of Pretoria• Greg Schlegel------------SCRM Academician/Consultant
• SCRM WORKSHOP-12th, 9:00am– Supply Chains & Risk Mgmt:– DEEP DIVE into– HOW exemplar companies SURVIVE
& THRIVE– During & After a disruption
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Supply Chains & Risk Management (SCRM):Two Powerful Disciplines Joined-at-the-Hip
Gregory L Schlegel CPIM, CSP, Jonah
Founder, The SCRM Consortiumgregschlegel@thescrmconsortium.comExecutive-in-Residence, Lehigh [email protected]
June 10, 2019