- Risk Management
In the fall of 2009 MIT CTL conducted a global survey of supply chain risk experiences, attitudes, and risk management practices. Over 1400 supply chain professionals from 70 countries participated. Supply chain risk management, resilience and business continuity planning have been talked about for the last 10 years. Some progress is being made in terms of metrics, assessment tools, processes and templates. However, supply chain risk management involves a wide array of concepts such a facility security, product quality, counterfeiting and product tampering, regulatory compliance, supplier management, inventory management, and commodity hedging. Risks occur in every corporate and supply chain function. However, unlike financial reporting, there is no company-wide network of risk-aware people monitoring risks and collecting information about it. As a result, there is no overall high-level picture of supply chain risk across a company. Furthermore, as any risk manager will attest, senior management only shows interest in managing risk when there is a crisis. Such issues recede quickly when the crisis passes and normal service is resumed.
In terms of organizational readiness, 32% of respondents said their company has a risk manager or group that was effective. However, 18% said they had such a group but it was not effective, and 39% said they did not have such a group. A final 10% did not know or thought that such a resource did not apply to their company. Responses concerning business continuity planning were slightly worse. These results also varied significantly from country to country. When asked if their company worked on supply chain risk management, 46% of respondents from Switzerland and Spain said “yes and it is effective” while only 17% of Canadians said the same.
In short, slow progress is being made in terms of maturing supply chain risk management into a bona-fide function. This varies significantly from country to country. Supply chain managers who are serious about risk management need to be aware that this function will be much less developed and less supported within most of their trading partners’ organizations.
This white paper is part of a series of three papers that describe the results of the MIT CTL risk survey. Each paper is accompanied by a short video. The papers and videos are available at: http://ctl.mit.edu/research/global_scale_risk_initiative.