Procrastinators threaten the balance
by Rolf Zimmer
With her latest article in the recent issue of business + logistic magazine, Sabine Ursel, journalist, author and expert in the area of procurement and China business, focuses on the challenges of supply chain risk management. She raises the question why buyers, who know the importance of mitigating risk in the supply chain to protect their company, often neglect to set up a strategy. That’s why she thinks that procrastinators threaten the balance. For a better understanding of how a holistic approach can secure the success of a company, Sabine Ursel introduces three companies that totally understood the value of Supply Chain Risk Management. We think these best case examples give fantastic insights in how to incorporate that topic, so I am more than happy to share highlights on these success stories:
Best Practice Number 1: AGCO Corp.
According to Jan Theissen, Director Strategy Methods, Global Purchasing & Materials Management, AGCO emphasizes on the importance of awareness for Supply Chain Risk Management as well as the creation of roles within the processes. Since 2012 the way the company engages with its risk exposure has totally changed. Especially, the purchasing department has executed a complete global transformation, which includes a process-supported Supply Chain Risk Management. The stage was set to engage with risk in a new way that managed to span several areas – country, logistical, performance, supplier, supply and more. AGCO is able to monitor the whole process, starting from risk analyses and –assessment to risk governance up to the observation of remaining risks. Potential risks are detected at an early stage, therefore AGCO obtains its delivery capability, secures their compliance and protects its corporate image.
By using a software solution for the proactive monitoring and assessment of risks along their supply chain is AGCO in the position to visualize their supply chain in near real-time. The riskmethods Supply Risk Management software provides AGCO only with relevant data in the form of indicator messages and uses there for several connected data sources like MunichRE Nathan Risk Suite, Worldbank, World Factbook or the riskmethods Risk Intelligence.
Best Practice Number 2: HBM (Hottinger Baldwin Messtechnik GmbH)
Karl-Heinz Pöhlmann, Vice President Supply Chain at HBM, outlined at this year’s Exchange Conference the transformation of his company towards a Total Supplier Management approach. Pöhlmann described the Supplier Risk Management Maturity in 4 steps:
– Establishing order (e.g. creation of action plans, coordination of intern and external communication, etc.)
– Defining standards (e.g. establishing and formulating goals, developing KPIs,etc.)
– Introducing methods (Total Supplier Management, systemic analyzing of data sources, defining global standards)
– Measuring the value (Total Cost of Partnership, Profit at Risk as well as focus on factor image/compliance.
HBM is in the position to continuously measure the performance as well as the development of the suppliers. In this process a cross-functional Task Force selects the applicable escalation model. Furthermore, Karl-Heinz Pöhlmann points out that even outages at supposedly negligible C-parts can lead to severe supply chain disruptions.
Best Practice Number 3: Drägerwerk AG & Co. KGaA
Achim Sinn, Head of Global Order Fulfillment and Business Process Owner Supply Chain Management, states that Supply Chain Risk management at Dräger starts with detecting and assessing the potential risks. Dräger has the approach to take adequate measures in order to prevent or to mitigate risks. The scenario-based identification of risks leads to deriving measures such as Last-Time-Buy-quantities which are allocated to several distribution centers or the preparation of alternative distribution centers. Thus, Dräger can ensure to always have a backup plan in their pockets. Achim Sinn says that their main task is currently to improve the connection of all existing approaches beyond their supply chain.
Sabine Ursel also talked to Prof Dr. Michael Henke, Head of the Fraunhofer IML Institute and Chair for business logistics (TU Dortmund), who put it straight: „It is recommendable for every company with a lower real net output ratio to implement a professional supply chain risk management solution.“
For more on this topic, read the whole article (in German): https://www.riskmethods.net/presseartikel/2015-08_business-logistic_risikomanagement.pdf