supply chain risk management - summary charts - 24 april 2014

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Executive Overview Today’s supply chains are a risky proposition. The factors are numerous and rising. They include: outsourcing, complexity, global operations, demand volatility and supplier fragility. In our view, supply chains are not up to the challenge. They are fragile. Supply chain risk management is a factor in business continuity planning. Over 80% of companies see risk management as an important piece of their company’s strategy, but in over 50% of companies, the effort is buried in other processes. It is not top of mind. In another 20% of companies, leaders are just getting started on a risk management program. The reason? Many of the concepts are new. The processes are evolving, and companies are unsure. However, the risks are growing and the potential consequences for companies are large.it is growing in importance. Consider the facts: • Pervasive. In 2013, 80% of companies had a material disruption. It was not one. On average, it was three. Companies are not prepared for the challenges they face. • False Sense of Security? Today, 68% of companies feel that they are better prepared than five years ago, but their focus has been a narrow and traditional focus on supply. Few companies are attacking risk management holistically. • Foundational Gaps. Visibility in the extended supply chain--both demand and supply--is a growing risk. Demand volatility is the largest gap to companies today; and only 18% of companies have visibility to second and third-tier suppliers. Yet, the funding for companies is tied up in multi-year ERP programs that do not address the problem. In this report, we share the results from the study along with case studies from our client engagements to make the point that supply chains today are not able to withstand the risk. We believe that there needs to be a call to action.

TRANSCRIPT

Supply Chain Insights LLC Copyright © 2014, p. 1

Supply Chain Risk Management Study

Summary ChartsApril 2014

Supply Chain Insights LLC Copyright © 2014, p. 2

Agenda

Study Overview

Risk Overview

Risk Drivers and Disruptions

Risk Management Performance

Supply Chain Insights LLC Copyright © 2014, p. 3

Study Overview

Supply Chain Insights LLC Copyright © 2014, p. 4

Respondents Primarily Work for Manufacturers and Average Revenue is $5 Billion

Supply Chain Insights LLC Copyright © 2014, p. 5

Two-Thirds of Manufacturers Are in a Process Industry,Especially Consumer Packaged Goods

Supply Chain Insights LLC Copyright © 2014, p. 6

Respondents Primarily Work in a Supply Chain Roleand One-Quarter Are Vice Presidents or Higher

Supply Chain Insights LLC Copyright © 2014, p. 7

Most Report That the Supply Chain Leader Reportsto a C-Level Executive or the President

Supply Chain Insights LLC Copyright © 2014, p. 8

Agenda

Study Overview

Risk Overview

Risk Drivers and Disruptions

Risk Management Performance

Supply Chain Insights LLC Copyright © 2014, p. 9

Definition Given to Respondents

Supply Chain Insights LLC Copyright © 2014, p. 10

Risk Management Is a Relatively Low Source of Business Pain for Respondents

Supply Chain Insights LLC Copyright © 2014, p. 11

Over Half Report Risk Management Is Embedded inOther Processes

Supply Chain Insights LLC Copyright © 2014, p. 12

Most Consider Risk Management an ImportantPart of Company’s Supply Chain Strategy

Supply Chain Insights LLC Copyright © 2014, p. 13

Over Half Driven to Risk Management Becauseof Major Supply Chain Disruption

Supply Chain Insights LLC Copyright © 2014, p. 14

Two in Five Report the Head of the Supply Chain IsResponsible for Supply Chain Risk Management

Supply Chain Insights LLC Copyright © 2014, p. 15

Top Supply Chain Descriptive Challenges Today:Global, Many, Controlled, & Room for Improvement

Supply Chain Insights LLC Copyright © 2014, p. 16

Top Supply Chain Descriptive Challenges NEXT Year:Proactive, Strategic, Aligned, Controlled & Global

Supply Chain Insights LLC Copyright © 2014, p. 17

Greatest Improvements in Positive Descriptors:Proactive and Aligned

Supply Chain Insights LLC Copyright © 2014, p. 18

Agenda

Study Overview

Risk Overview

Risk Drivers and Disruptions

Risk Management Performance

Supply Chain Insights LLC Copyright © 2014, p. 19

Supply Side and External Risks Are Most CommonIssues Addressed by Risk Management

Supply Chain Insights LLC Copyright © 2014, p. 20

Top Three Drivers of Supply Chain Risk TODAY:Demand Volatility, Supply Chain Visibility,

and Operations Complexity

Supply Chain Insights LLC Copyright © 2014, p. 21

Top Categories for Most Common Risk Drivers:Partners and Internal Drivers

Supply Chain Insights LLC Copyright © 2014, p. 22

Partner-Related Drivers Expected to Decline Over Time;Internal and Consumer Drivers Expected to Increase

Supply Chain Insights LLC Copyright © 2014, p. 23

Partner-Related Drivers Expected to Decline Over Time;Internal and Consumer Drivers Expected to Increase

Supply Chain Insights LLC Copyright © 2014, p. 24

Drivers Most Expected to Increase: Regulatory Compliance, Operations Complexity,

and Consumer Power

Supply Chain Insights LLC Copyright © 2014, p. 25

Areas of Increasing Supply Chain Risk:Operations Complexity, Regulatory Compliance and

Consumer Power

Supply Chain Insights LLC Copyright © 2014, p. 26

Demand Volatility Is Only Top 3 Driver in Past, Present and Future

Supply Chain Insights LLC Copyright © 2014, p. 27

Top Areas of Increased Risk vs. 5 Years Ago:Regulatory Compliance and Operations Complexity

Supply Chain Insights LLC Copyright © 2014, p. 28

Top Areas of Expected Increase Risk in 5 Years:Regulatory Compliance and Operations Complexity

Supply Chain Insights LLC Copyright © 2014, p. 29

Top Areas of Increased Risk in 5 Years vs. 5 Years Ago:Operations Complexity and Consumer Power

Supply Chain Insights LLC Copyright © 2014, p. 30

Top Two Supply Chain Disruptions in 5 Years:2011’s Tsunami in Japan and 2012’s Hurricane Sandy

Supply Chain Insights LLC Copyright © 2014, p. 31

80% Had Any Disruptions in 2013, but Only 30% Included Them in Financial Reporting

Supply Chain Insights LLC Copyright © 2014, p. 32

Agenda

Study Overview

Risk Overview

Risk Drivers and Disruptions

Risk Management Performance

Supply Chain Insights LLC Copyright © 2014, p. 33

About Half Report Their Company Is Performing Well on Supply Chain Risk Management

Supply Chain Insights LLC Copyright © 2014, p. 34

While 80% Report Risk Management Is Important, Only Half Report Good Performance

Supply Chain Insights LLC Copyright © 2014, p. 35

Over Two-Thirds Claim Company’s Risk Management Is Better Than 5 Years Ago

Supply Chain Insights LLC Copyright © 2014, p. 36

Why Changes in Risk Management Vs. Five Years Ago(Open-Ended)

Supply Chain Insights LLC Copyright © 2014, p. 37

Demand Volatility Is Top Driver of Risk Today, but Companies Are Most Prepared for Product Quality Issues

Supply Chain Insights LLC Copyright © 2014, p. 38

Drivers Less Prepared for Compared to Risk:Computer Security and Product Quality

Supply Chain Insights LLC Copyright © 2014, p. 39

Less Than One in Five Has Visibility of Their ExtendedNetwork During Supply Chain Disruptions

Supply Chain Insights LLC Copyright © 2014, p. 40

82% Monitor the Financial Status of 1st Tier Suppliers vs. 44% for Extended Tier Suppliers

Supply Chain Insights LLC Copyright © 2014, p. 41

Most Important Risk Management Techniques:Business Continuity Plans, Conversations with Suppliers

and Customers, and Inventory Buffers

Supply Chain Insights LLC Copyright © 2014, p. 42

Overall Back-up Plans Are Most Important Type of Risk Management Technique

Supply Chain Insights LLC Copyright © 2014, p. 43

Expected New Risk Management Techniques(Open-Ended)

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