Home Security & Supply Risk: A Tale Of Dogs, Smoke Detectors & Digitization

I have a home filled with animals including two dogs. Both will alert me of any approach to my house and one would certainly act if there was an unwanted entry. So, the question is: “Is my home safe?” What has home security got to do with supply chain risks?

 

Home Security and supply chain risks

Managing the safety of one’s home environment has been undergoing an evolution since the 80s. This evolution very much parallels what is happening in the enterprise relative to managing the risk with suppliers and more broadly across the entire supply chain. Let’s examine the evolution of home security as a guide for where the enterprise must go, albeit with a higher rate of change.

Home Security and Supply Chain Risks

Home Security and Supply Chain Risks

Historically home security was equated to having a dog at home to alert and ultimately to keep the unwanted intruder out.

Over time smoke alarms were introduced to warn of the potential of fire. The evolution in safety then produced additional single threat monitoring devices with new alarm types such as carbon monoxide and radon detectors. To this point in our story, there is only a collection of single threat solutions that each have to be acquired and cared for independently.
The big transition came in the form of an active monitoring system that bought with it the consolidation of monitoring enabled by digitization and automation of the monitoring (e.g. dogs replaced by video, door entry and glass break). The introduction of a centralized control tower to speed reaction time (e.g. sending the police or fire dept.) at an affordable price made the solution available to pretty much all homeowners. And today, these systems can be run and monitored in the palm of your hand via your mobile device.

Risk in the enterprise is undergoing a similar and more rapid evolution.

Risk management used to equate to category and supplier management professionals interacting with their suppliers to see if everything was copacetic. The financial crisis of 2007 and 2008 pushed organizations to begin to monitor the financials of their suppliers paralleling the smoke detector being fit for purpose but providing protection for only one of many possible threats. As the public became more aware of new threat types to their homes and in the case of the enterprise as Social Responsibility grew in importance, CSR was added-on, like a carbon monoxide detector but still this was just one more point solution and falls short of being comprehensive.

The demands of the modern supply chain require a comprehensive approach to risk that accounts for specialization, geographic expansion and rising social awareness. A comprehensive approach must cover all aspects of risk including viability, delivery, image, compliance, market factors and performance. It requires that all potential disruptions are actively monitored and that there is an active program to re-mediate and ideally prevent the occurrence of such events. The enterprise is ready for its comprehensive approach to threats that are actively monitored.

Another interesting aspect of the move to a centralized and affordable home monitoring system is that it can be employed broadly making it attractive to all home owners. This means the monitoring can be implemented across all the homes in a neighborhood  (or ecosystem) bringing better security to all. This again parallels what is happening in the enterprise.

More than half of supply disruptions occur beyond tier 1 suppliers

Traditionally only the largest enterprises were able to afford a comprehensive risk management program but as many enterprises have experienced and disruption data confirms, their resilience is dependent upon that of their suppliers often tier-2 and below. Risk does not discriminate. Monitoring of your suppliers is a great start but more than half of supply disruptions occur beyond tier 1 suppliers so monitoring all of your supply chain and even better if you have your suppliers monitoring their own supply chains, a network effect of resilience occurs and benefits all.
So, what do you think about it? I’m looking forward to your comments below.
Bill DeMartino is the General Manager of North American operations at riskmethods. Bill plays a leading role in accelerating riskmethods’ international expansion, specifically in the Americas, and growing the firm into the industry’s leading Supply Chain Risk Management solution. Bill has 15 years of experience in the procurement and supply management solution space, where he built his expertise in Analytics and Supply Risk & Compliance acting across various disciplines and leadership roles in product management, sales and marketing at IBM, Emptoris and Determine. Bill is a recognized Supply Management luminary including having been selected as a “Pro-to-Know” by Supply and Demand Chain, a speaker at industry events and author of papers.

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